X-Tal Minerals Corp.
NEX BOARD : XMT

X-Tal Minerals Corp.

November 22, 2010 09:30 ET

Retransmission: X-Tal Announces Update on Merger Agreement With American Eagle Resources, Inc. and Resumption of Trading

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 22, 2010) - X-Tal Minerals Corp. (TSX VENTURE:XMT.H) (the "Company" or "X-Tal") is pleased to announce that, further to its press release dated November 2, 2010, the TSX Venture Exchange ("TSXV") has accepted for filing its merger documentation and technical report on Form 43-101, subject to final review and approval, and that it will resume trading on the NEX on Monday, November 22, 2010 at 9:30 AM EST.

Under the terms of the definitive Merger Agreement (the "Agreement"), the Company will acquire all of the outstanding shares of American Eagle Resources, Inc. ("AME") (the "Transaction"). The combined entity will focus on generating shareholder value through the exploration and development of its mineral projects in Fiji.

Under the terms of the Agreement, the parties shall amalgamate and consolidate all of their outstanding common shares and stock options. AME and X-Tal currently have 21,108,543 and 6,300,001 common shares outstanding, respectively, representing 77% and 23% ownership in the combined company.

About the Company

The Company has historically been involved in the business of mineral exploration and development. However, it has been without active operations for a number of years. During this time period, the Company's business activities have involved using its available resources to identify and evaluate assets or businesses which, when acquired, would qualify the Company for listing as either a Tier 1 or Tier 2 Issuer on the TSXV. In February 2009, the Company commenced discussions with AME regarding the proposed acquisition of all of the issued and outstanding securities of AME by the Company. Since this time, the Company has been actively involved in proceeding with the steps necessary to carry out a transaction with AME.

About AME

AME is a private British Columbia corporation that holds, through its subsidiary Lion One Limited Fiji, five Special Prospecting Licenses covering 38,034 hectares in the Fijian Islands, including the assets collectively known as the Tuvatu project ("Tuvatu"). A technical report for Tuvatu dated October 1, 2010 has been completed according to NI 43-101 guidelines by P&E Mining Consultants of Brampton, Ontario.

The Tuvatu High-Grade Gold Project

Tuvatu hosts the second largest gold deposit in Fiji after the large Emperor Gold Mines ("Emperor") gold deposit at Vatukoula (7 million oz. Au produced to date). These deposits are 50 km apart and are associated with the same NE trending lineament of alkaline rocks on the island of Viti Levu. Epithermal gold veins at Tuvatu occur along the margins of the eroded Navilawa volcanic center in a multi-phase environment also featuring porphyry copper-style mineralization.

Historic and Current Mineral Resource and Reserve Estimates

Historical mineral resource estimates for Tuvatu were reported in compliance with the Australian Joint Ore Reserves Committee (JORC) guidelines and included Indicated Mineral Resources of 1,065,000 tonnes at 8.45 grams Au per tonne, or 289,000 oz. Au, in addition to Inferred Mineral Resources of 757,000 tonnes at 10.31 grams Au per tonne, or 251,000 oz. Au. In connection with a pre-feasibility study commissioned by Emperor in 2000, a Probable Reserve was reported of 269,034 oz. Au grading 6.3 grams Au per tonne.

A NI 43-101 compliant Mineral Resource Estimate prepared in conformance with generally accepted CIM "Estimation of Mineral Resource and Mineral Reserves Best Practices" (2005) guidelines was completed in August 2010 by P&E and supersedes all historic resources. Eugene Puritch P.Eng., and F.H. Brown, CPG, Pr.Sci.Nat. of P&E are the QP's responsible for preparation of the Mineral Resource Estimate shown below.

The total sampling database for the Tuvatu project consists of 607 records encompassing data from surface and underground sampling and surface and underground drilling. The mineral resource was estimated using Inverse Distance Cubed weighting of capped composite samples, with a grade capping of 40g/t Au. The strike length of the deposit is on the order of 900 m.

 P&E Underground Mineral Resource estimate at a 2.0 g/t Au cut-off1,2,3 as of August 1, 2010
  Indicated Inferred
Tonnes x 1000 Au g/t Au Oz x 1000 Tonnes x 1000 Au g/t Au Oz x 1000
Sulphides 760 7.05 172 2.502 5.78 465
Oxides 0 0 0 116 4.15 15
TOTAL 760 7.05 172 2,618 5.71 480
(1)
Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues. 
(2)
The quantity and grade of reported inferred resources in this estimation are conceptual in nature. There is no guarantee that all or any part of the Mineral Resource will be converted into Mineral Reserve. 
(3) Based on a gold price of US$983.00/oz. and 90% process recovery. Underground operating costs supporting the 2.0 g/t cut-off are as follows; mining $30/t, processing $15/t, G&A $13/t

Planned Financing of $10 Million

In conjunction with the Transaction, the Company has engaged MGI Securities Inc., (the "Agent") as an advisor. MGI Securities has also been engaged as an agent along with PI Financial Corp. to carry out a concurrent private placement (the "Financing") of up to 10,000,000 subscription receipts priced at $1.00 per subscription receipt. The Agent has also agreed to serve as a sponsor for purposes of TSXV approval. Upon completion of the Transaction, each subscription receipt will, for no additional consideration, automatically be exercised into one unit of the Company, each unit consisting of one common share of the Company and one half of one share purchase warrant, with each whole warrant entitling the holder to purchase one common share of the Company at a price of $2.00 for a period of 12 months following closing. The Financing is expected to close on or before December 15, 2010. At closing the gross proceeds of the Financing will be held in escrow pursuant to the terms of a subscription receipt agreement to be entered into by the Company and Computershare Investor Services Inc., and will be released to the Company upon the completion of the Transaction. 

The Company has agreed to pay cash commissions of up to 6% of the gross proceeds raised, and issue agent's warrants of up to 6% of the number of shares sold. In addition, the Agents have the option (the "Agents' Option") to sell up to that number of additional units which is equal to 15% of the number of units sold pursuant to the offering at a price equal to the Issue Price. The Agents' Option may be exercised at any time within 30 days after the closing date of the offering.

Upon completion of the Transaction and Financing, it is anticipated that the Company will have approximately 37,408,544 common shares, approximately 2,705,000 stock options, 5,000,000 warrants, and 600,000 broker warrants outstanding.

Upon completion of the Transaction and Financing, the Company expects to use its available funds towards commencing and completing the exploration programs on Tuvatu. 

Change of Name

In connection with the closing of the Transaction, the Company will also complete a name change to Lion One Metals Limited and plans to graduate from the NEX to the TSX Venture Exchange ("TSXV").

New Board Composition

Upon completion of the Transaction, it is expected that Walter H. Berukoff, who is currently a director of both companies, Richard Meli, and David Duval, will remain as directors of the Company. In addition, it is expected that upon completion of the Transaction, George S. Young will be appointed as President and Director, Darcy Krohman will be appointed as Chief Financial Officer and VP Exploration, and Hamish Greig will be appointed as Corporate Secretary. 

The Transaction is unanimously supported by the Board of Directors of both AME and X-Tal and will be fully described in the Management Information Circulars to be filed with regulatory authorities and mailed to AME and X-Tal shareholders in accordance with applicable securities laws. The Transaction will be subject to disinterested shareholder approval of the Company, and will be voted upon at the Annual Meeting of the Company, to be held at the offices of the Company on or about December 21, 2010. The record date for the meeting will be November 16, 2010.

The Agreement will result in a Reverse Takeover ("RTO"), as defined under the TSXV Corporate Finance Manual, of the Company, which is subject to shareholder and regulatory approval, including approval of the TSXV. The Transaction is also subject to the approval of the AME shareholders. The shares of the Company to be issued to current shareholders of AME may be subject to escrow and/or resale restrictions in accordance with applicable securities legislation and the policies of the TSXV.

Darcy Krohman, P.Geo, a Qualified Person for the Company under the meaning of Canadian National Instrument 43-101, has reviewed the technical information in this news release.

ON BEHALF OF THE BOARD OF DIRECTORS

Walter H. Berukoff, Chairman

Completion of the Transaction is subject to a number of conditions, including Exchange 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 the Transaction, any information released or received with respect to the RTO may not be accurate or complete and should not be relied upon. Trading in the securities of the Company should be considered highly speculative.

The Agent, subject to completion of satisfactory due diligence, has agreed to act as sponsor to the Company 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.

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.

Contact Information

  • X-Tal Minerals Corp.
    Walter H. Berukoff
    Chairman
    604-998-1250
    604-998-1253 (FAX)
    www.xtalminerals.com