TYLER RESOURCES INC.
TSX VENTURE : TYS

TYLER RESOURCES INC.

December 06, 2007 07:00 ET

Tyler Resources Mails Letter to Shareholders; Reiterates Recommendation to Reject Mercator Minerals' Hostile Offer

CALGARY, ALBERTA--(Marketwire - Dec. 6, 2007) - Tyler Resources Inc. (TSX VENTURE:TYS) ("Tyler" or the "Company") today mailed the following letter to all Tyler shareholders affirming the Tyler Board of Directors' recommendation that shareholders reject the unsolicited offer from Mercator Minerals Ltd. and not tender their shares.

The full text of the letter, as mailed and filed with Canadian securities regulators, is as follows:

Dear Tyler Resources Shareholder:

By now you should have received a copy of the Tyler Resources Board of Directors' Circular recommending that you reject Mercator Mineral's hostile takeover bid. If you haven't already, we would urge you to read the Circular, especially the sections entitled "Analysis and Reasons for Rejecting the Offer" (page 2) and "Background to the Offer and Response of Tyler" (page 15).

The Tyler Board continues to believe that the Mercator Offer does not serve the best interests of Tyler Shareholders. Its timing is highly opportunistic and it fails to adequately compensate Tyler Shareholders for the loss of opportunity to participate in the Company's future growth as the Bahuerachi deposit advances towards feasibility, development and production.

Mercator's interest in the Bahuerachi deposit comes as no surprise. Bahuerachi is an emerging world-class asset with exceptional development potential. It is the fourth largest porphyry deposit in Mexico in terms of copper resources, the largest in terms of its zinc resources, and it ranks among the largest undeveloped deposits of its kind in North America. To date, the Bahuerachi deposit and district remain open for both expansion of the current resource and for further discoveries.

With the Mercator Offer set to expire December 17th, 2007, unless it is withdrawn or extended, it is an appropriate time to reiterate the Tyler Board's unanimous recommendation and to provide shareholders with a brief update on the Company and the process it is following in response to the Mercator Offer.

Tyler's exploration efforts are bearing fruit...

Since Mercator commenced its offer on November 9th, Tyler has issued two important news releases, both indicating positive drill results at our polymetallic deposit in Bahuerachi. On November 14th, Tyler announced a new discovery five kilometres from the Main Zone, where we have already identified a resource of 525 million tonnes of mineralization since 2004. On November 29th, Tyler announced successful step-out drilling at the Main Zone, which increased the width of known mineralization to the west over a strike length of approximately 800 meters and, in some cases, more than doubled the previous deposit widths compared to the May 2007 model. This is expected to have a positive affect on both the size and value of the deposit.

In the western portion of Bahuerachi, all sections remain open for further expansion and drilling will continue to test this potential until year-end for the new resource modeling scheduled for January 2008. In addition to what has already been identified, there is still significant, untested exploration potential on the property. Since Mercator commenced its offer on November 9th, Tyler has clearly and publicly demonstrated the significant potential to increase the size and economics of the Bahuerachi project. To date, Mercator has refused to assign any additional value for this potential in its offer.

... and Mercator is attempting to acquire Tyler before the fruit ripens...

By mid-2008 we expect to complete a pre-feasibility study that will provide shareholders with far more information about the size and value of Bahuerachi. Additionally, we have made significant progress on a number of logistical fronts, including locating favourable areas for tailings and the processing plant, begun a water testing program, received the pre-feasibility level geotechnical report and begun to assemble required samples for advanced metallurgical studies. With the Main Zone's extended width, we expect to be able to develop a wider and deeper pit than proposed in the November 2007 scoping study, allowing access to a greater portion of the existing resource and positively impacting the scale of the project. Mercator is attempting to acquire Tyler before it can achieve these important and widely recognized value-enhancing milestones. If Mercator's hostile bid succeeds, you will be denied the opportunity to fully benefit from the pre-feasibility study as well as Tyler's long-term development plans for Bahuerachi.

...while offering Tyler Shareholders a small fraction of a combined company...

Simply put, Mercator is asking Tyler Shareholders to trade a 100% interest in this emerging world-class asset for a 14.6% fully diluted interest in a combined company with a number of significant operational and financial risks, none of which are currently associated with the advancement of Tyler's business plan. What's worse, Tyler Shareholders face the potential for even greater dilution should Mercator need to raise additional capital to fund the development of Bahuerachi or to maintain its existing operations, something we believe is likely to happen as Mercator has limited borrowing capacity.

...and proposing to use Tyler's own cash to fund development on a slower track.

On a conference call with the investment community on October 19th, Mercator indicated that it planned to use Tyler's own cash to fund the continued development of the Bahuerachi project. Mercator further indicated that it would advance the project on a timeline that is slower than the plan Tyler already has in place, a plan that Tyler's Board, its officers and its team of consultants have the experience required to effectively execute on.
In its Offer Circular filed November 9th, Mercator failed to identify and quantify any meaningful synergies in the proposed combination. In fact, none of the benefits Mercator has alluded to in the Offer Circular can be quantified, nor would they be unique to the transaction that Mercator is proposing in this hostile manner to Tyler Shareholders.

REJECT the Mercator Offer and do NOT tender your shares.

The Board firmly believes the Mercator Offer significantly undervalues Tyler. But don't just take our word for it. Mercator's own financial advisor, Jennings Capital Inc., issued research reports in mid October that indicate that Jennings believes that Tyler is worth significantly more than what Mercator is offering. Those same reports, dated October 10th and October 18th, also indicate that Jennings believes that Tyler has substantially greater upside than Mercator.

Moreover, the terms of the Mercator Offer are substantially lower than an offer Mercator made to Tyler on October 5th, 2007, which contemplated an offer price of $1.25 for each Tyler common share implying an exchange ratio of 0.1437 on October 5th, 2007, and which Tyler viewed as inadequate and allowed to expire on October 10th, 2007. We see no reason for Tyler shareholders to accept Mercator's offer considering that it is less than full value for Bahuerachi.

Your Board of Directors and its Special Committee of independent directors, together with Tyler's management, financial and legal advisors, is now actively soliciting, evaluating and working towards potential alternatives to the Mercator Offer that may enhance shareholder value. Tyler has been solicited by and initiated contact with a number of third parties who have expressed an interest in considering alternative transactions.

To facilitate this process, Tyler has established an electronic data room, which has now been populated with more than 3,500 pages of documents covering all aspects of the Bahuerachi project, Tyler's operations and the structure of its technical, environmental, legal and financial situation. The data room is providing access to critical information for third parties around the world and is being expanded on a routine basis as the Company receives requests for further due diligence materials. Tendering Tyler Shares to the Mercator Offer before Tyler fully explores all available alternatives will preclude the possibility of a financially superior transaction emerging.

Taken as a whole, we do not see how the Mercator Offer serves the best interests of Tyler Shareholders. The Tyler Resources Board is unanimous in its recommendation that shareholders reject the Mercator Offer and not tender their shares to it. If you have tendered your shares to the offer, the Board recommends that you withdraw them immediately. For assistance in doing so, please contact Kingsdale Shareholder Services Inc., the information agent retained by Tyler, at toll free 1-866-639-3460.

If you have not yet received the Directors' Circular in the mail, a copy can be obtained from our web site at www.tylerresources.com and on SEDAR at www.sedar.com. A copy can also be obtained by calling Kingsdale Shareholder Services at 1-866-639-3460.

As always, thank you for your continued support of Tyler Resources.

Sincerely,

TYLER RESOURCES INC.

Jean-Pierre Jutras, Director, President and Chief Executive Officer

Alan Craven, Chairman of the Board of Directors and the Special Committee

About Tyler Resources

Tyler Resources Inc. is a well-funded Canadian junior exploration company focused on base and precious metals exploration in Mexico. Tyler's primary project is the Bahuerachi property, which hosts Mexico's fourth largest mineralized porphyry deposit. As part of its ongoing drill program, the Company has now drilled in excess of 52,000 meters of combined diamond and reverse circulation drilling since 2004, making it one of the most active Canadian junior exploration companies operating in Mexico. For more information, visit www.tylerresources.com.

Reader Advisory

As required by National Instrument 43-101, Tyler cautions that the scoping study is a preliminary assessment and is preliminary in nature. It includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary assessment will be realized.

Except for the historical and present factual information contained herein, the matters set forth in this news release, including words such as "expects", "projects", "plans", "anticipates", will and similar expressions, are forward-looking information that represents management of Tyler's internal projections, expectations or beliefs concerning, among other things, future operating results and various components thereof or the economic performance of Tyler. The projections, estimates and beliefs contained in such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause Tyler's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, those described in Tyler's filings with the Canadian securities authorities. Accordingly, holders of Tyler shares and potential investors are cautioned that events or circumstances could cause results to differ materially from those predicted. Tyler disclaims any responsibility to update these forward-looking statements.

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

Contact Information

  • Corporate Contacts
    Tyler Resources Inc.
    Jean Pierre Jutras, President/CEO/Director
    (403) 269-6753 or Toll Free 1-888-237-7898
    Website: www.tylerresources.com
    or
    Media Contacts
    Longview Communications
    Alan Bayless
    (604) 694-6035
    or
    Media Contacts
    Longview Communications
    David Ryan
    (604) 694-6031
    or
    Shareholder Information
    Kingsdale Shareholder Services Inc.
    Toll Free: 1-866-639-3460