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Baltic, Phoscan sign formal merger agreement

2008-02-01 14:26 MT - News Release

Mr. Donald McKinnon reports

BALTIC RESOURCES AND PHOSCAN CHEMICAL FINALIZE ARRANGEMENT AGREEMENT; SHAREHOLDER MEETINGS SCHEDULED FOR MARCH 4, 2008

Baltic Resources Inc. has entered a definitive arrangement agreement with Phoscan Chemical Corp. providing for a plan of arrangement to implement the merger originally reported in Stockwatch news dated Oct. 29, 2007, and has obtained an interim order from the Court of Queen's Bench of Alberta in respect of the arrangement. Pursuant to the arrangement, Baltic and Phoscan will combine their interest in the Martison phosphate project, in which they each currently hold an equal joint venture interest.

Pursuant to the arrangement, Baltic will also transfer to its newly formed subsidiary, Canadian Orebodies Inc., all of Baltic's assets other than Baltic's interest in the Martison phosphate project and 90 per cent of the proceeds of warrants and options exercised since Oct. 29, 2007, and Orebodies will assume all of Baltic's liabilities, other than certain advances made by Phoscan on Baltic's behalf in respect of the Martison phosphate project. Baltic will then amalgamate with Phoscan's wholly owned subsidiary, 1366825 Alberta Ltd. The TSX Venture Exchange has granted conditional approval of the listing of Orebodies shares on the TSX-V. Final approval of the listing is subject to the completion of the arrangement and all of the requirements of the TSX-V.

Under the arrangement, Baltic shareholders will receive in exchange for each common share of Baltic 1.4 common shares of Phoscan and one common share of Orebodies. Based on the currently outstanding shares, a total of approximately 51,843,259 common shares of Phoscan will be issued in exchange for Baltic shares, such that former Baltic shareholders will hold approximately 37.2 per cent of the then issued and outstanding common shares of Phoscan. Upon completion of the arrangement, three representatives of Baltic, being Donald McKinnon, Chris Hodgson and Gordon McKinnon, will become directors of Phoscan.

Each of Baltic and Phoscan will hold meetings of shareholders on Tuesday, March 4, 2008, to consider the arrangement and certain related matters. Completion of the arrangement is conditional upon, among other things, the approval of a majority of votes cast by Phoscan shareholders and at least two-thirds of the votes cast by Baltic shareholders, as well as final court approval. The boards of directors of each of Phoscan and Baltic have approved the arrangement and have unanimously recommended that shareholders vote in favour of approval of the arrangement.

Mr. McKinnon, president and chief executive officer of Baltic, commented: "We believe the merger between Baltic and Phoscan to consolidate interests in the Martison project is an instrumental step that will accelerate the project and provide excellent value for our shareholders. Also, it will allow Canadian Orebodies to focus on its non-phosphate projects and we look forward to an exciting year with the new company."