Press Release Source: Aquiline Resources Inc., Absolut Resources Corp.
Aquiline to Acquire Absolut Resources
Tuesday October 2, 1:41 pm ET
TORONTO, ONTARIO--(Marketwire - Oct. 2, 2007) - Aquiline Resources Inc. ("Aquiline" or the "Company") (TSX:AQI - News) and Absolut Resources Corp. ("Absolut") (TSX VENTURE:ABS - News) are pleased to report they have entered into a binding letter agreement (the "Letter Agreement") pursuant to which Aquiline offers to acquire 100% of the issued and outstanding shares of Absolut that it does not already own by way of a three way transaction (the "Transaction"). This is a transaction between two companies with an established historical relationship, and would result in the creation of a Gold Division within Aquiline, the initial focus of which will be Absolut's Pico Machay project in Peru and Aquiline's Calcatreu project in Argentina. If the Transaction is successful, Dan Noone, President and CEO of Absolut, will become Aquiline's President of the Peru subsidiary, and the team of technical engineers and geologists currently advancing Pico Machay will continue under Aquiline.
The combination of Aquiline and Absolut delivers to shareholders:
Advanced gold assets: Absolut's Pico Machay project in Peru has 580,000 inferred gold ounces (Mineral Resource Estimate, Caracle Creek International Consulting, Oct. 2006, see breakdown below in Table A), which is being advanced as described in the most recent Absolut press release dated Sept. 26, 2007. Absolut is currently completing engineering and metallurgical studies in support of permit applications. Studies to date (see Technical Report cited above) have reflected high gold recoveries (greater than 88%) in a style of mineralisation that would be amenable to a low capital, low cost, heap leach operation.
Proven mining jurisdiction: Aquiline secures assets in another Spanish-speaking South American jurisdiction, with a well-established mining code and long track record of foreign ownership.
Technical expertise: Absolut has a team of engineers and metallurgists with mine-building experience based in Lima, Peru. Upon completion of this transaction, Aquiline intends to appoint Mr. Harry Burgess of Micon International to serve as an external director.
Aquiline has been a 10% shareholder of Absolut in the past, and currently owns 2,766,000 Common Shares representing approximately 9.7% of the issued and outstanding Common Shares of Absolut and 1,970,000 Absolut warrants exercisable at $0.75 and $1.00. Absolut currently has 28,375,247 shares issued and outstanding, 5,000,000 warrants (3,500,000 exercisable at a price of $0.75 per share until Aug. 26, 2008 and 1,500,000 exercisable at a price of $1.00 per share until December 6, 2007) and 2,450,000 options, at a weighted average exercise price of $0.72 with expiry dates from 2007 to 2012. The shares, unexercised warrants and options of Absolut will be exchangeable at the exchange ratio outlined below to shares, warrants and options of Aquiline, excluding Absolut shares and warrants held by Aquiline.
Marc Henderson, President and CEO of Aquiline, commented "With gold prices approaching record highs and Absolut making steady progress towards production at Pico Machay, now seemed like an excellent time for Aquiline to expand its gold interests. Our Calcatreu project is an attractive asset - particularly in the current price environment - but has been totally overshadowed by Navidad and will benefit from the geographic and jurisdictional diversification that Absolut brings to the table in this transaction."
Summary of Terms
The proposed structure of the Transaction will be finalized in a definitive agreement (the "Exchange Agreement"), the principal terms of which are expected to be announced within the next 30 days. The Transaction contemplates a three-way transaction between Aquiline, a wholly-owned Aquiline subsidiary to be incorporated for the purpose of the Transaction and Absolut. Aquiline's wholly-owned subsidiary will then be amalgamated with Absolut to create a new entity wholly owned by Aquiline, and the Absolut shareholders will receive Aquiline shares as follows: (i) 0.1 common shares of Aquiline for each common share of Absolut and (ii) 0.1 warrants of Aquiline for each one warrant of Absolut, subject to a price adjustment equal to the exchange ratio. The Agreement will provide for an adjustment of the exchange ratio based on the difference in trading prices of the respective companies. This value represents a premium of 70% over the value of Absolut's shares at closing on September 28, 2007 (closing price $0.60) and a 47% premium over the 61 day (last two months) volume weighted average trading price on the date ended Sept 28, 2007.
On completion of the proposed Transaction, which is expected to occur prior to the year end, and assuming no exercise of existing Absolut warrants and options, it is anticipated that Aquiline will issue an aggregate of 2,560,925 Aquiline common shares to Absolut shareholders, representing approximately 4.7% of the issued and outstanding common shares of Aquiline. This number could be increased by the number of warrants and options of Absolut exercised, but such effect is neutral as the offer comprises shares, warrants and options on the same ratio basis.
The Letter Agreement has received unanimous support from both Boards, and Absolut has established a Special Committee of its Board to engage a financial advisor who will deliver an independent valuation. Under the terms of the Letter Agreement, Aquiline and Absolut have agreed to grant each other exclusivity subject to certain exceptions and Absolut has agreed to pay Aquiline a break fee in the amount of $1,000,000 payable under the customary conditions should Absolut solicit or recommend alternative offers from competing parties.
Closing conditions will be detailed in the forthcoming Exchange Agreement, and will include but not be limited to the completion of due diligence investigations, shareholder approval by two-thirds of the votes cast by disinterested Absolut shareholders present and voting at a special meeting of shareholders called to approve the Transaction, compliance with the related party rules contained in Ontario Securities Commission Rule 61-501, and stock exchange approvals.
ABOUT AQUILINE RESOURCES
Aquiline Resources Inc. is a precious metals exploration and development company. The Company's core strategy is to acquire advanced stage high-grade precious metal deposits within the Americas. Aquiline's two main assets are the Calcatreu Gold Project, in Rio Negro Province, Argentina and the Navidad Silver Project in neighbouring Chubut Province. Aquiline operates Navidad in trust under an Interim Project Development Agreement. These projects both occur along the Gastre Fault, an emerging mineralized district in southern Argentina that consists of several near-surface zones of high-grade mineralization, amenable to open pit mining.
ABOUT ABSOLUT RESOURCES
Absolut Resources Corp. is a Peruvian-focused gold exploration and development company based in Toronto, Canada. Absolut strongly believes in an international best practices approach, and implements this on all its social and environmental decisions. Absolut has implemented a quality control program to ensure best practice. The required qualified person for the Pico Machay Gold Project is Mr. Dan Noone who is a member of the Australian Institute of Geoscientists and is the President and CEO of Absolut Resources Corp.
