Queensland Minerals Ltd.

Queensland Minerals Ltd.

October 12, 2010 08:30 ET

Queensland Minerals Enters into an Option Agreement with Dundee Precious Metals


Queensland Minerals Ltd. (TSX VENTURE:QML) (the "Company" or "Queensland") is pleased to report that the Company has entered into an option agreement dated October 4, 2010 (the "Option") on the basis of the previously-announced non-binding letter of intent with Dundee Precious Metals Inc. ("DPM") dated August 9, 2010.

Summary of the Transaction

Pursuant to the Option, Queensland is entitled, subject to the terms and conditions of the Option, to acquire indirectly 100% of DPM's interest in all of the issued and outstanding securities of Dundee Moly Company d.o.o. ("Molyco"), a company incorporated in Serbia (the "Transaction"). Molyco is the holder of several mineral licenses including mineral licenses related to the Surdulica molybdenum project, the Tulare copper and gold project and other early stage projects located in Serbia (hereinafter referred to as the "Serbian Assets"), which Serbian Assets are described in the Company's February 23, 2010 press release. The Option is valid for one year from the date of execution of the option agreement (the "Option Period").

The completion of the acquisition through the exercise of the Option by Queensland will be subject to: (1) Queensland having raised in one or more financings (the "Combined Financings") aggregate gross proceeds of at least $10 million ("Minimum Financing Amount") prior to the expiry of the Option Period (which includes any amounts raised in the Interim Financing described below); and (2) Queensland having expended aggregate exploration expenditures of $3 million on the Serbian Assets during the Option Period. Other conditions such as obtaining all requisite regulatory, shareholder, stock exchange or governmental authorizations and consents, including the approval of the TSX Venture Exchange (the "TSXV") will be required before the Company can exercise the Option.

Upon exercise of the Option, Queensland will issue to DPM such number of units ("Vendor Units") in the capital of Queensland as will equal 47.5% of the issued and outstanding shares of Queensland on a non-diluted basis as of the date of the exercise of the Option (subject to adjustments under certain circumstances). Each Vendor Unit will be comprised of one common share in the capital of Queensland (a "Vendor Share") and that number of warrants (but not less than half a warrant per Vendor Unit) (each whole warrant, a "Vendor Warrant") as is equal to the number of warrants per unit sold in the Combined Financings. The total number of Vendor Warrants to comprise the Vendor Units will reflect in proportion the number of Queensland warrants forming part of units sold in the various tranches of the Combined Financings on a pro rata basis of each of the tranches of the Combined Financings. The exercise price of the Vendor Warrants shall be the lesser of the exercise price of issue price of units sold in the Initial Financing (described below) and $0.42 per warrant for a term being the greater of 2 years and the term of the warrants forming part of the Initial Financing.

In addition to entering into the Option, Queensland and DPM have entered into an agreement whereby DPM has a participation right to maintain its pro-rata ownership in Queensland. The Option also contemplates the entering into of certain other ancillary agreements, including: a standstill agreement relating to certain conduct of DPM, dependent upon its ownership position in Queensland, relating to take-over bids; and the grant by Queensland to DPM of qualification rights pursuant to which DPM will be entitled to request the qualification for distribution by prospectus in all provinces of Canada (other than Québec) of DPM's shares of Queensland, at DPM's expense, and as long as DPM holds more than 20% of the outstanding shares of Queensland.

David Fennell will remain chairman of the Company and James Crombie will remain CEO. Alain Krushnisky will remain CFO and Anthony Walsh will remain chair of the audit committee. The names and backgrounds of the persons that the Company anticipates will constitute principals of the Company upon exercise of the Option are described in the February 23, 2010 press release.

Initial Financing

As announced in its August 30, 2010 press release, in connection with the Transaction, the Company plans to complete a non-brokered private placement financing of approximately $4 million of units of its securities (the "Units") at $0.30 per Unit (the "Initial Financing"). Each Unit will consist of one common share of Queensland (a "Common Share") and one Common Share purchase warrant (a "Warrant"). Each Warrant will entitle the holder to subscribe for one Common Share at $0.42 for a period of 24 months from the closing date of the Initial Financing. The Initial Financing is anticipated to close on or about October 8, 2010. Approximately 13% of the Initial Financing is being subscribed for by insiders of the Company.

The Initial Financing is subject to certain conditions including, but not limited to, the receipt of all necessary corporate and regulatory approvals, including the approval of the TSXV.
The Company intends to apply the net proceeds raised from the Financing to conduct exploration on the Serbian Assets and for general working capital.

The Initial Financing will be conducted in reliance upon certain prospectus and private placement exemptions in Canadian jurisdictions and in certain jurisdictions outside Canada, and all securities to be issued will be subject to a four month hold period.

The Company will have the right, commencing 180 days after the closing date of the Initial Financing, to accelerate the expiry date of the outstanding Warrants if the closing price of the common shares of the Company on any stock exchange in Canada is higher than $1.00 for 20 consecutive trading days in which case the Warrants will expire on the 30th day after the date on which notice of such acceleration is provided by the Corporation to the holders of Warrants.

As noted in the Company's press release dated August 30, 2010, the Company will not be completing the $10 Million private placement financing announced on February 23, 2010.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any of the Common Shares or Warrants (the "Securities") in the United States. The Securities have not been and will not be registered under the U.S. Securities Act or any state securities laws, and may not be offered or sold in the United States without registration under the U.S. Securities Act and all applicable state securities laws, or an applicable exemption from registration requirements. No public offering of the Securities will be made in the United States in connection with the Initial Financing.

Sponsorship may be required by the TSXV unless an exemption from sponsorship is available. The Company intends to apply for an exemption from the sponsorship requirement. There is no assurance that the Company will be able to obtain such an exemption.

About Queensland Minerals Ltd.:

The Company is an exploration company with mineral properties in the State of Queensland, Australia. Since becoming TSXV-listed issuer in 2007 upon completion of its initial public offering, Queensland has carried out mineral exploration in Queensland, Australia through its two wholly-owned subsidiaries. In late 2008, the Company halted all field activities as a result of its limited financial resources, and the Company's projects, of which there is currently only one, have been on care and maintenance since. Subsequently, the Company closed its Australian exploration office and has been engaged in seeking new opportunities and financing for its next phase as a public company. Additional information about the Company is available on SEDAR at www.sedar.ca.

About Dundee Precious Metals Inc.:

DPM is a Canadian based, international mining company engaged in the acquisition, exploration, development and mining of precious metal properties. Its common shares and share purchase warrants (Symbol: DPM; DPM.WT; DPM.WT.A) are traded on the Toronto Stock Exchange (TSX). DPM owns the Chelopech Mine, a gold/copper concentrate producer and the Krumovgrad gold project, a mining development project, both located in Bulgaria, Namibia Custom Smelters (Pty) Ltd., a concentrate processing facility located in Tsumeb, Namibia and 95% of the Kapan Mine, a gold/copper/zinc concentrate producer in southern Armenia. In addition, DPM holds certain exploration and exploitation concessions in some of the larger gold-copper-silver mining regions in Serbia. Additional information about DPM is available on SEDAR at www.sedar.ca.


This press release contains forward-looking information. In particular, this press release contains statements concerning the prospective Transaction of the Company and the Serbian Assets. The information about the Serbian Assets has not been independently verified by the Company. Although the Company believes in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because the Company can give no assurance that they will prove to be correct. Forward-looking information is subject to known and unknown risks and uncertainties, and depends on assumptions (including, but not limited to, assumptions about the exploration potential of the Serbian Assets and the identified exploration targets) and other factors, all of which may cause actual results or events to differ materially from those anticipated in such forward-looking information. The terms and conditions of the prospective transaction may change, including based on finalization of the corporate and tax structuring of the transaction, the success of the Initial Financing, regulatory and third party comments, consents and approvals and the parties' ability to satisfy the conditions of the Transaction in the required timeframes. The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligations to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Completion of the transaction is subject to a number of conditions. Completion of the Initial Financing is subject to TSXV acceptance. The exercise of the option and completion of the acquisition of the Serbian assets is subject to a number of conditions, including TSXV acceptance and disinterested Shareholder approval. 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 to be prepared in connection with this 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 Queensland Minerals Ltd. should be considered highly speculative.

The TSX Venture 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."

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

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