Palladon Ventures Ltd.

Palladon Ventures Ltd.

February 06, 2006 12:30 ET

Palladon Announces Iron Project Financing

SALT LAKE CITY, UTAH--(CCNMatthews - Feb. 6, 2006) - Palladon Ventures Ltd. (TSX VENTURE:PLL)(FWB:PV1) (the "Company") is pleased to announce that private subsidiary Palladon Iron Corporation ("PIC"), has agreed to project financing terms that will allow for the start of construction on a two million metric ton per year iron ore facility at its iron property in Cedar City, UT (the "Iron Project"). PIC's 50% joint venture partner Luxor Capital Partners, LP ("Luxor") has agreed to provide equity funding for the first US$2mm of project financing (the "Initial Financing"). The Initial Financing closed on February 6, 2006; the proceeds will be used to secure mineral processing equipment and for mine site preparation.

In addition to the Initial Financing, Luxor has committed to provide equity funding for an additional US$14mm to fully fund PIC's initial capital budget. The Secondary Financing is conditioned upon the finalization of an operating budget that is acceptable to Luxor. The pre-money valuation of both the Initial and Secondary Financings is US$10.3 million ($10,300 per share).

As part of the financings, Palladon was granted an option struck at $10,300 per share to fund its pro-rata portion of the required financing (US$8mm). This option expires on the latter of: a.) the closing of the Secondary Financing and b.) July 31, 2006. To the extent the Company does not exercise its option upon the closing of the Secondary Financing, the strike price on the option increases with time until its expiry date.

Should the Company elect to exercise its option at a time at which the strike price has increased from $10,300 per share, Palladon may still choose to re-strike the option at $10,300 per share. In lieu of the higher strike price, PIC will agree to dividend from project cash flow to Luxor, a preference payment. In both instances (the increased strike price or the preferred dividend), the amount of value paid to Luxor is tied to the increased cash flow that will be generated from the project because of the extra operating time provided by Luxor's upfront commitment. Thus, Palladon can maintain its entire interest in the project even in the event of financing at the later date.

Don Foot, President & C.O.O of Palladon Ventures Ltd., commented, "We are thrilled to have a committed partner who will enable Palladon to proceed with the construction of an operating mining and processing facility on an expedited schedule. This transaction also provides the opportunity of maintaining our interest in Palladon's Iron Mountain project."


Donald G. Foot, Jr., President & Chief Operating Officer

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