Phoenician Holdings Corp.
TSX VENTURE : PX.P

September 02, 2005 15:27 ET

Phoenician Holdings Corp. Provides Further Detail on Qualifying Transaction

TORONTO, ONTARIO--(CCNMatthews - Sept. 02, 2005) - Phoenician Holdings Corp. (the "Corporation") (TSX VENTURE:PX.P). The Corporation is pleased to provide further details regarding the previously announced letter agreement dated December 21, 2004 (the "Letter Agreement") between the Corporation and Asia Now Resources Limited ("Asia Now"). Under the Letter Agreement, the Corporation and Asia Now will complete a business combination structured as a 'three-cornered' amalgamation involving 2064402 Ontario Inc., a wholly-owned subsidiary of the Corporation ("Phoenician Subco"), and Asia Now (the "Amalgamation"). When completed, Phoenician will become the "Resulting Issuer". The primary assets of the Resulting Issuer will be the Asia Now mineral exploration properties in the Habo, Beiya, Dongchuan and Ma Touwan areas of Yunnan Province, People's Republic of China (the "Asia Now Gold Projects").

Under the Letter Agreement, the Corporation will issue two (2) common shares of the Corporation (the "Phoenician Shares") at a deemed price of $0.32 per share in consideration of each common share of Asia Now (an "ANR Share"). The Corporation will also assume, on substantially the same terms and conditions, 4,345,400 Asia Now purchase warrants at an exercise price of $0.75, expiring on the date which is 45 days after the Amalgamation; 1,500,000 Asia Now options to purchase ANR Shares ("ANR Options") at an exercise price of $0.40, expiring on August 1, 2008; and 400,000 Asia Now Options at an exercise price of $0.55, expiring on September 1, 2008.

The Amalgamation will result in the Corporation issuing an aggregate of 31,791,968 Phoenician Shares to the holders of ANR Shares. Following the completion of the Amalgamation, the Resulting Issuer will have 34,916,968 common shares, 8,690,800 share purchase warrants and 4,300,000 options outstanding.

The proposed transaction is expected to constitute the Corporation's Qualifying Transaction as defined in Policy 2.4 of the TSX Venture Exchange (the "Exchange"). Subject to regulatory approval and the completion off a private placement financing, the Corporation expects to announce a closing date as soon as practicable.

ABOUT ASIA NOW

The principal business of Asia Now is the acquisition, exploration and development of mineral resource projects, including copper, gold and silver, in China. Asia Now commenced operations in April 1997 and is currently involved in the exploration and development of the Asia Now Gold Projects. Asia Now conducts its business in China through a number of sino-foreign cooperative joint venture limited liability companies (each a "CJV") established with three state-owned exploration enterprises: Yunnan Geology and Mineral Resource Co. Limited ("YGMR"), Yunnan Non-Ferrous Geology and Mineral Resources Company Limited ("YNGM") and Yunnan Jinsha Mining Co. Ltd. ("YJM"); and with the 2nd Geological Team of the Hebei Prospecting and Developing Bureau of Geology and Mineral Resources ("2nd Geological Team").

As noted, Asia Now is a party to a number of CJVs, which are established in accordance with and subject to Chinese law. In each case, Asia Now is responsible for contributing cash to the registered capital and to the total investment of the CJV and the various Chinese parties to the CJVs are responsible for contributing exploration rights. The parties to a CJV determine their respective interests in the CJV based upon agreement. Although the various CJVs are limited liability companies, they do not issue shares. Each party to a CJV determines its profit and risk based upon its relative interest in the CJV. Interests in a CJV may vary over time as agreed by the parties.

In each case, the CJVs have been established as exploration CJVs. The parties to the various CJV agreements have provided terms and conditions to govern development and exploitation, but in each case such terms and conditions will be subject to fresh approval by the competent Chinese regulatory authorities, as will the transfer of any mining licenses to any CJV.

The DONGCHUAN project is a gold, copper and base metals mineral resource project located in the Dongchuan area of Yunnan Province, China and is composed of two (2) exploration licenses for a total area of 36.64 km2. Work on the Dongchuan Project is being conducted by Yunnan Dong Sha Now Resources Company Limited, a CJV created under the CJV agreement with YJM, signed January 15, 2004 ("YJM-CJV"). Under the YJM-CJV, during the exploration phase, Asia Now holds 75% and YJM holds 25% of the CJV.

The DONGCHUAN and MA TOUWAN project is approximately 400 km2 and held under eleven (11) exploration licences in the Dongchuan and Ma Touwan areas of Yunnan Province, China. This gold, copper and base metals project is being explored under the CJV Yunnan Dong Xin Mineral Exploration Company Limited ("Dongxin"), which was created by the CJV agreement with YNGM ("YNGM-CJV"), January 17, 2004. Asia Now holds 72% of Dongxin and YNGM holds the remaining 18%, provided the terms of the YNGM-CJV continue to be met.

The HABO and BEIYA projects are two separate projects in the Habo and Beiya areas of Yunnan Province, China. These projects are being explored for base and precious metals under the CJV, Yunnan Now Mineral Exploration Company ("Yunnan Now"). Yunnan Now was created April 5, 2004 under a CJV agreement with YGMR ("YGMR-CJV"). The Habo project is 162.24 km2 and broken into three (3) separate exploration licences. The Beiya project is made up of four (4) licences, totalling 120.99 km2. As per the YGMR-CJV, Asia Now holds 70% of Yunnan Now during the exploration stage, while YGMR holds 30%.

The GREAT WALL project was acquired last year under the CJV signed with the 2nd Geological Team on June 14, 2004. The resulting CJV, Hebei Now Resources Company Limited ("Hebei Now") was formed for the purpose of carrying out exploration on the Great Wall gold project (approximately 24 km2 total area). Asia Now carries an 80% interest in Hebei Now.



Selected Financial Information

Asia Now Phoenician
Year Ended Quarter Ended
March 31, 2005 March 31, 2005
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(audited) (unaudited)

Current Assets $ 2,587,593 $ 328,966
Total Assets 4,426,559 328,966
Current Liabilities 185,417 56,755
Total Liabilities 185,417 56,755
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Revenue $ 189 $ -
Net Income (Loss) $ (453,458) $ (4,059)
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Working Capital $ 2,402,176 $ 272,211
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Additional Financing

It is expected that in order to meet the Exchange's minimum listing requirements, the Corporation will seek additional financing in connection with the completion of the Amalgamation. The terms of the financing have not yet been established.

New Board and Management

Philip S. Martin - Proposed Director, Chairman and Chief Executive Officer

Mr. Martin graduated with a degree in mining from Imperial College, London and an M.B.A. from Cranfield University, England. He has a broad range of experience in the mining industry as well as in mining finance and research. From 1969 to 1973 he was with the RTZ group in Australia with the iron ore company, Hammersley, and in Canada with the uranium company, Rio Algom. From 1974 to 1978 he was a consultant engineer with Dames & Moore in Toronto before joining TD Bank where he gained seven years' experience in corporate mining and international finance both in Toronto and Sydney.

In 1986, Mr. Martin joined Gordon Capital in Toronto where for 12 years he specialized in research and investment banking in the mining sector. Since 1998 he has undertaken a number of independent consultancy assignments and non-executive directorships.

Dr. Kaihui Yang - Proposed Director and President

Dr. Yang obtained his PhD. in geology from China University of Geoscience, Beijing, in 1990. He was with the former Ministry of Geology and Mineral Resources (now the Ministry of Land and Resources) of the PRC from 1983 to 1993. Dr. Yang has worked as a consultant for a number of Canadian major and junior mining companies on their mining and exploration projects in China and in eastern Canada since 1993. He served as a consultant for the World Bank Group for its project on the mineral potential of Asian countries in 2000 to 2001. Apart from his independent consultancy, he was awarded a Canadian Federal Governmental fellowship in 1993 and since then, he has been an economic geologist at the Department of Geology, University of Toronto.

Dr. Yang is experienced in the evaluation and management of exploration projects and has explored extensively for mineral deposits in China and Canada. Results of his work in southwestern China have been used as a guide to the planning of drilling programs that consequently led to the discovery of new ore bodies. In 1993 he was awarded a commendation for his contributions to economic geology by the former Minister of Geology and Mineral Resources of the PRC. He has extensive knowledge of the policies, regulations and laws applicable to mineral exploration and mining operation in China. He has extensive contacts with personnel in a variety of companies and in the offices of the Chinese central and local governments. He has served as a Chinese (Mandarin) - English interpreter and co-organizer of high level business meetings and trips for several Chinese industry and government delegations during their visits to Canada.

Dr. Yang is a fellow of the Society of Economic Geologists (SEG) and has given a number of presentations and lectures at various conferences in Canada, the United States, Japan, Europe and China. He has published a number of economic geology papers in international journals including Nature. He was also invited to write articles on the China gold and base metal resources for the Mining Journal (London) and the Gangue (a newsletter) of the Canadian Geological Association.

David Lyn - Proposed Chief Financial Officer

Mr. Lyn has broad experience in the financial services business. Since obtaining his C.A. designation in 1982, Mr. Lyn has held several management positions of increasing responsibility. By 1991, Mr. Lyn was Chief Accountant for one of Canada's largest life insurance companies, and by 1997 he was Senior Vice President, Financial Reporting for Newcourt Credit Group Inc., the second largest leasing company in the world. While at Newcourt, Mr. Lyn was responsible for worldwide accounting and reporting, as well as lease administration for all Canadian portfolios. He also had responsibility for all North American securitization programs and was an active participant in the Newcourt's merger and acquisition activities.

Since leaving Newcourt in 2000, Mr. Lyn assisted in the completion of Toronto's 2008 Summer Olympic Bid. As well, he has completed several various consulting assignments, including debtor valuations, financial restructurings and mergers and acquisitions.
Mr. Lyn graduated from McGill University with a Bachelor of Commerce in Finance. He also holds a Master of Business Administration in Accounting and became a Chartered Accountant in 1982. Mr. Lyn was born in Kingston, Jamaica and has been a Canadian citizen since 1977.

James S. Borland - Proposed Secretary

Mr. Borland is President of Borland Levand & Associates, a firm that provides investor relations and corporate secretarial services to its clients in the resources sector. Previously, from 1998 until 2001, he was Manager of Research Communications for BMO Nesbitt Burns Inc., a major Canadian securities firm. Prior to joining BMO Nesbitt Burns, Mr. Borland was Vice President, Investor Relations, for Boliden Ltd., an integrated mining company with operations in Sweden, Spain, Canada and Chile, after having served as Communications Manager for the Nickel Development Institute, an international market development organization, from 1992 to 1997. From 1987 to 1992, he was Editor of The Northern Miner newspaper, having worked at the publication as a journalist since 1984. Mr. Borland is currently a director of TSXV-listed Acadian Gold Corporation.

Noel White - Proposed Director

Noel White is an Australian citizen. His education includes a B.Sc. Honours in Geology at the University of Newcastle, NSW, and PhD. in Geology at the University of Tasmania, Hobart. He joined BHP after completing high school in 1964 and continued working for BHP until 1999. In 1974, he was employed as a geologist at BHP Minerals Exploration. In 1992, he was appointed as the Chief Geologist. He has worked in 44 countries and for many years worked as an operations geologist and program manager. His operational roles included exploration and project generation for nickel, base metal and gold. In 1999 he left BHP and returned to Australia to set up an independent consultancy based in Brisbane. Since then he has been a consultant for the World Bank Group and mining companies. He is an independent board member of Gold Aura Pty. Ltd., a Brisbane-based company listed on the Australia Stock Exchange.

Dr. White's professional memberships include the Society of Economic Geologists, Society for Geology Applied to Mineral Deposits, International Association on the Genesis of Ore Deposits, Geological Society of Australia and Australian Institute of Geoscientists. He has been a Professional Geoscientist (AIG) since 1987 and Chartered Professional (Geology) (AusIMM) since 2000. He has served on the editorial boards of Journal of Geochemical Exploration and Geology. He was technical editor for SEG Newsletter for three years and is currently a member of the editorial board of Mineralium Deposita. He has given keynote and invited lectures at conferences in Canada, Japan, Australia, the United States, New Zealand, the United Kingdom, Switzerland, Russia, Finland and Norway.

Arm's Length Transaction

The Amalgamation was negotiated on an arm's length basis by parties dealing at arm's length and therefore is not a non-arm's length qualifying transaction under the policies of the Exchange. As a result, Phoenician will not be required to hold a shareholders' meeting as a condition to the completion of the Amalgamation. Asia Now will be holding a special meeting of Asia Now Shareholders to obtain shareholder approval for the Amalgamation. A notice of special meeting will be mailed to Asia Now Shareholders at least twenty-one days prior to the meeting.

Sponsorship

Paradigm Capital Inc. of Toronto (the "Sponsor") will act as sponsor to the Qualifying Transaction. The Sponsor does not hold any Phoenician or Asia Now securities. Other than in its role as Sponsor of the Amalgamation, the Sponsor has no material relationship with either Phoenician or Asia Now.

Asia Now and the Sponsor entered into a sponsorship engagement agreement (the "Sponsorship Agreement") on February 15, 2005. Pursuant to the terms of the Sponsorship Agreement, Asia Now is to pay the Sponsor the sum of $35,000 plus all legal costs incurred by the Sponsor, for which Asia Now agreed to deliver to the Sponsor a retainer of $15,000. In exchange, the Sponsor has agreed to prepare a sponsorship report relating to the Amalgamation, in accordance with the requirements of the Exchange.

The Sponsor will specifically address in its report the experience and expertise of the proposed management of the Resulting Issuer, the compliance of Phoenician and Asia Now with the rules of the Exchange and such other due diligence matters as may be appropriate.

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Paradigm Capital Inc., subject to completion of satisfactory due diligence, has agreed to act as sponsor in connection with the transaction. An agreement to sponsor should not be construed as any assurance with respect to the merits of the transaction or the likelihood of completion.

Contact Information

  • Phoenician Holdings Corp.
    Rick Brown
    President
    (416) 867-8280
    or
    Asia Now Resources Limited
    Jim Borland
    Director
    (416) 214-5524