San Anton Resource Corporation

San Anton Resource Corporation

February 03, 2010 09:00 ET

San Anton Announces Business Combination With Kings Minerals

TORONTO, ONTARIO--(Marketwire - Feb. 3, 2010) - San Anton Resource Corporation (TSX:SNN) ("San Anton" or the "Company") announces that, subject to certain conditions, it has agreed in principle with its controlling shareholder, Kings Minerals NL (ASX:KMN) ("Kings"), to complete a business combination whereby Kings will acquire all of the issued and outstanding shares of San Anton not presently owned by Kings in exchange for shares of Kings. In connection with the transaction, Kings intends to apply for a listing on the Toronto Stock Exchange ("TSX") and to complete a financing to be used for the development of the Company's San Anton Project.

Under the terms of the proposed transaction, Kings will establish a wholly-owned Canadian subsidiary which will amalgamate with San Anton (the "Amalgamation") to form an amalgamated company ("Amalco"). Pursuant to the Amalgamation, Kings will receive all of the common shares of Amalco so that Amalco will become a wholly-owned subsidiary of Kings and the shareholders of San Anton, other than Kings, will receive two (2) ordinary shares in the capital of Kings for each San Anton common share held.

On February 2, 2010, the last trading day before the announcement of the proposed transaction, the closing price of San Anton's common shares on the TSX was C$0.25 and the closing price of Kings' ordinary shares on the Australian Securities Exchange ("ASX") was A$0.155. Using the noon nominal exchange rate of the Bank of Canada on February 2, 2010, the share exchange ratio represents an approximately 16% premium over the value of the Company's common shares based on such closing prices, and an approximately 25% premium based on the volume weighted average trading prices for San Anton's common shares on the TSX and for King's ordinary shares on the ASX over the twenty most recent trading days.

San Anton currently has 105,195,690 common shares issued and outstanding, of which Kings owns, indirectly through its wholly-owned subsidiary Kings Minerals Mexico Pty Ltd., 75,000,001 common shares, representing approximately 71.3% of the issued and outstanding common shares of the Company. Kings currently has 424,510,871 ordinary shares issued and outstanding, as well as 6,350,000 ordinary shares issuable upon exercise of outstanding stock options. Upon completion of the Amalgamation, the former shareholders of San Anton (other than Kings) will hold approximately 60,391,378 ordinary shares of Kings, representing approximately 12.5% of the issued and outstanding ordinary shares of Kings after giving effect to the Amalgamation but before the proposed financing by Kings.

In addition to its interest in San Anton, Kings owns the Mount Isa Project, which is an exploration stage molybdenum/copper/gold/rhenium project of significant promise, located near Mount Isa, Australia and composed of six exploration permits and three exploration permit applications. The Mount Isa Project hosts a current mineral resource of 30,000 tonnes of molybdenum, 2,300,000 ounces of rhenium, 195,000 tonnes of copper, and 295,000 ounces of gold estimated in September 2008, and based on 74 drill holes for a total of 33,318 metres. Kings has commenced project studies to evaluate the opportunities for development of Mount Isa, with initial indications that underground mining is the preferred option, and a review of the geological model for input into more detailed underground geotechnical and mining studies has been initiated. Metallurgical test work results from six core samples sent to JK Tech Laboratories, Brisbane showed excellent recoveries of all valuable metals in preliminary flotation test work on samples from the two mineralised domains. The results indicate that the primary recovery stages will yield high metal recoveries for the downstream cleaning/upgrading stages and that high value products from the deposit containing molybdenum, rhenium, copper and gold can be produced utilising a conventional flow sheet and process conditions. Kings intends to continue with pre-development studies on the project, and a budget has been prepared for undertaking a bankable feasibility study.

Norman Seckold, the Chairman of San Anton, is the Chairman of Kings and Craig McPherson, a director of San Anton, is the Chief Financial Officer of Kings.

In connection with the completion of the Amalgamation, Kings intends to change its name and to apply for a listing on the TSX. Kings has not yet applied nor been accepted for listing on the TSX, and listing will be subject to fulfilling all of the listing requirements of the TSX. There is no assurance that a listing on the TSX will be obtained. In addition, Kings intends to complete a financing to be used for the development of the Company's San Anton Project.

Norman Seckold, the Chairman of San Anton, stated "Combining San Anton and Kings will better position the companies for advancing the development of the San Anton Project, which will be for the benefit of the shareholders of both of our companies. Moreover, we believe that the terms of the proposed transaction are attractive to San Anton's minority shareholders and they will be able to participate in Kings' Mount Isa Project in addition to the San Anton Project."

John Cook, the President and Chief Executive Officer of San Anton, added "In the course of recent financing efforts, we have received much feedback from potential investors that they would prefer a unified Kings and San Anton structure. This transaction will achieve that goal and we believe that will enable us to adequately fund the next stage towards development of the San Anton Project, which will benefit San Anton's shareholders. As an added benefit, we will also be able to reduce a significant amount of duplicative public company costs that both San Anton and Kings incur as separate reporting issuers in Canada and Australia".

Completion of the transaction is subject to a number of conditions, including the receipt of all required regulatory, stock exchange, director and shareholder approvals. The transaction cannot close until all such approvals are obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Because Kings is a related party to San Anton, the proposed transaction is subject to the valuation and minority approval requirements of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Board of Directors of San Anton has established a special committee of independent directors, namely Donald Christie, Jeffrey Dawson and Nicholas Tintor, to retain an independent valuator to provide a valuation for the proposed transaction and to consider the fairness of the proposed transaction, from a financial point of view, to the shareholders of San Anton (other than Kings) and to supervise the preparation of the valuation and fairness opinion.

Copies of the formal valuation and fairness opinion, factors considered by the special committee and the Board of Directors and other relevant background information will be included in the management information circular that will be sent to San Anton's shareholders in connection with the special meeting (the "Meeting") to consider the transaction. The Meeting will be scheduled to be held on a date to be announced in the future. For the transaction to proceed, a special resolution authorizing the Amalgamation must be approved by at least two-thirds of the votes cast by holders of the Company's common shares at the Meeting (including Kings and its affiliates). In addition, in accordance with MI 61-101, the proposed transaction is conditional upon the approval of the majority of the minority of San Anton's shareholders (excluding Kings and its affiliates). The proposed transaction will also be conditional upon customary terms for transactions of this nature, including there being not more than 5% of San Anton's shareholders who exercise their right of dissent in respect of the Amalgamation.

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 proposed transaction may not be accurate or complete and should not be relied upon. Trading in securities of San Anton should be considered speculative.

Neither the TSX nor the ASX have in any way passed on the merits of the proposed transaction, nor have they approved or disapproved the contents of this press release.

Bill Fleshman FAusIMM(CP), San Anton's Project Manager and a Qualified Person under National Instrument 43-101, has reviewed and approved the technical information in this release as it relates to San Anton. John Skeet, the Chief Operations Officer of Kings and a member of the Australasian Institute of Mining and Metallurgy, and a Qualified Person under National Instrument 43-101, has reviewed and approved the technical information in this release as it relates to the Mount Isa Project.

About San Anton Resource Corporation

San Anton Resource Corporation is an exploration and development company that is listed on the TSX and is totally focused on the mining friendly jurisdiction of Mexico. The Company's principal asset is a 64% interest in the San Anton Property (Goldcorp 36%), which hosts the near-surface Cerro del Gallo gold-silver-copper deposit. The Property is located in a historic gold-silver mining district and has only recently been subjected to modern exploration techniques. This work quickly identified several targets and has led to the delineation of a NI 43-101 Measured & Indicated Mineral Resource of 461 million tonnes grading 0.27g/t gold (3.9Moz), 11g/t silver (163Moz) and 0.11% copper (1.09Blb) and an Inferred Mineral Resource of 166 million tonnes grading 0.11g/t gold (0.6Moz), 7 g/t silver (39Moz) and 0.10% copper (0.36Blb). Within the overall deposit, there is a 'gold domain zone' containing Measured & Indicated Mineral Resource of 209 million tonnes grading 0.48g/t gold (3.2Moz) and 11g/t silver (71Moz) and within this zone, there is a relatively higher grade gold resource defined at surface. The deposit remains open in several directions.

Cautionary statement regarding forward looking statements and information

This press release contains statements that constitute "forward-looking information" or "forward-looking statements" (collectively "forward-looking information") within the meaning of applicable securities legislation. This forward-looking information includes, among others, the scheduling of the Meeting and the completion of the Amalgamation as currently contemplated or at all.

Various assumptions were used in drawing the conclusions or making the forecasts and projections contained in the forward-looking information contained in this press release. Forward-looking information is based on current expectations and projections that involve a number of risks which could cause actual results to vary and in some instances to differ materially from those anticipated by San Anton. Undue reliance should not be placed on forward-looking information. The risk factors include, but are not limited to, the parties will not proceed with the proposed transaction or that the proposed transaction will not be successfully completed for any reason (including a failure to obtain the required approvals). Forward-looking information is based on the estimates and opinions of San Anton's management at the time the information is released. San Anton undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

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