Shear Minerals Ltd.

Shear Minerals Ltd.

June 06, 2005 14:23 ET

Shear Announces Acquisition of Hunter Gold Projects and Spin Out of Non-Diamond Properties and Appointments

EDMONTON, ALBERTA--(CCNMatthews - June 6, 2005) - Shear Minerals Ltd. (TSX VENTURE:SRM) ("Shear") is pleased to announce that it has entered into an arm's length agreement with the Hunter Exploration Group ("Hunter") to acquire all of Hunter's non-diamond mineral interests in 6 projects covering over 15 million acres in Nunavut and British Columbia, including the non-diamond rights to the Churchill Diamond Project located near Rankin Inlet, Nunavut. These projects together with Shear's gold properties will be transferred into a new wholly owned subsidiary of Shear ("Newco"). Shear will then distribute all of the Newco shares to its shareholders pursuant to a reorganization transaction which will result in each shareholder of Shear receiving one-fifth of a Newco share for each outstanding common share of Shear held. Newco will have the largest land package in North America focused on gold, base metals and uranium exploration.

"This transaction will unlock the value of our gold properties for our shareholders," says Shear President and CEO, Pamela Strand.

"Upon conclusion of this transaction Newco will have a diverse portfolio of projects led by an experienced management and technical team," says John Robins, principal of Hunter Exploration Group. "The combined assets will give Newco exposure to some of the most prospective land in the country for gold, nickel and uranium".

The Board of Directors of Newco will initially be comprised of five members, three appointed by Hunter and two appointed by Shear. John Robins P.Geo., has agreed to be the President and CEO of Newco. The exploration team will be led by Rob Carpenter Ph.D., P.Geo., an experienced geologist who has worked extensively in gold and base metal exploration throughout Nunavut.

To acquire the Hunter properties, Shear will issue 1.5 million shares of Shear ("Common Shares") together with warrants to acquire 750,000 Common Shares at an exercise price of $1.50 per Common Share within one year of issuance. In addition, Newco will issue to Hunter 3 million common shares of Newco together with warrants to acquire 3 million Newco shares exercisable at a price of $0.35 per Newco share for a period of two years. Newco will also reimburse Hunter for acquisition costs in an amount not to exceed $250,000.

The Hunter projects represent a highly diverse and prospective portfolio. Exploration of several of these land packages is highly leveraged through data sharing agreements with several diamond exploration activities on the Hunter properties. To date over $15 million dollars has been spent on the Churchill Diamond Project and Indicator Minerals Inc. land packages throughout the eastern Arctic.

"Access to this level of exploration data will provide Newco with a distinct exploration advantage," says John Robins. "On the Churchill Diamond Project alone Newco has access to over 70,000 line kilometres of high quality geophysical data, satellite imagery and over 7,500 till samples. In 2005, we anticipate that an additional $5 million will be spent on our projects by diamond companies alone. This gives us tremendous leverage in our exploration activities and access to data collected by the diamond companies."

Part of the Hunter portfolio includes the Matrix project located in south-central Nunavut, which is in a joint venture between Newmont Mining Corporation and Pacific Ridge Minerals Ltd. This $10 million joint venture is focused on exploring for analogues to the prolific Witwatersrand gold district of South Africa. A summary of all Hunter projects will be available on the Shear website at

Hunter is one of Canada's most successful private exploration groups and has an established track record in the mineral industry. Hunter has been instrumental in many generative projects in northern Canada and British Columbia since 1992 and has been involved in more than 30 kimberlite discoveries and the acquisition of over 30 million acres including the Churchill and Aviat Diamond Projects.

The acquisition from Hunter and the spin-out transaction is subject to a number of conditions, including all applicable third party consents, regulatory and shareholder approval.

Corporate Appointments

Shear is also pleased to announce the following two new corporate appointments.

Mr. Gerald Prosalendis has been appointed to the Board of Directors of Shear. Mr. Prosalendis is a corporate strategist who specializes in financial markets, corporate development, shareholder communications and the media. He was Vice President of Corporate Development for Dia Met Minerals Ltd. Mr. Prosalendis has been a consultant to Anderson & Schwab Inc., a mineral and business firm based in New York, a Senior Counselor for James Hoggan & Associates, Business Editor of The Vancouver Sun and is Vice President Corporate Development of Western Silver Corporation.

Mr. Norman Eaton, MBA has been appointed as Chief Financial Officer for Shear. Mr. Eaton holds a Bachelor of Arts from the University of Victoria and a Master of Business Administration from the University of Western Ontario. He is also the CFO of Grizzly Diamonds Ltd., where he supervised the initial public offering and public listing in 2004.

Shear Minerals Ltd. is a Canadian-based exploration company focused on diamond exploration in the Canadian North where it explores in established diamond districts and has discovered new ones. Shear currently has a portfolio of eight diamond projects, six of which are drill-ready. Shear has advanced its 51%-owned Churchill Diamond property in Nunavut from a conceptual grassroots project to a new kimberlite district. In 2005, Shear and its joint venture partners are conducting a well-funded, multidisciplinary exploration program focused on the discovery of diamonds.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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