Pan American Fertilizer fka PAF

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Pan American Fertilizer Corp. (CNSX: PAF) Announces Signing Of Arrangement Agreement

September 21, 2012
NOT FOR DISTRIBUTION TO U.S. MEWSWIRE SERVICES OR DISSEMINATEION IN THE UNITED STATES

VANCOUVER, BRITISH COLUMBIA, September 21, 2012 – Pan American Fertilizer Corp. (CNSX: PAF) (“Pan American” or the “Company”) is pleased to announce that further to its press release dated August 14, 2012, it has entered into an arrangement agreement dated September 18, 2012 (the “Arrangement Agreement”) with Pacific Potash Corporation (TSX-V: PP; OTCQX: PPOTF; FSE: P9P) (“Pacific Potash”) to acquire 100% of the issued and outstanding common shares of Pacific Potash by way of a statutory plan of arrangement (the “Transaction”) which will constitute a “major acquisition” for Pan American under the policies of the Canadian National Stock Exchange (the “CNSX”).

In connection with the Transaction, a wholly owned subsidiary of the Company (“Subco”), will amalgamate with Pacific Potash, the amalgamated company will become a wholly-owned subsidiary of Pan American and Pan American will issue securities of Pan American to the former security holders of Pacific Potash. The Pan American securities will be issued on the basis of one Pacific Potash security for 0.6312 of a Pan American security (the “Exchange Ratio”), such that the Company is expected to issue an aggregate of 25,234,135 common shares and 13,411,227 options or warrants to the security holders of Pacific Potash. Any options or warrants issued by the Company will have the same terms as the currently outstanding Pacific Potash options or warrants, subject to adjustment pursuant to the Exchange Ratio.

The parties have agreed to work diligently to close the Transaction no later than December 31, 2012 (the “Closing”). The Transaction is subject to the satisfaction or waiver of the conditions set out in the Arrangement Agreement, including receipt of an order of the Supreme Court of British Columbia, the approval of the CNSX and TSX Venture Exchange (“TSXV”) and the approval by a special majority of the Pacific Potash shareholders. There can be no assurance that the Transaction will be completed as proposed or at all.

Pan American’s common shares are currently listed on the CNSX. It is currently anticipated that Pan American will make an application for listing on the TSXV upon closing of the Transaction. The listing is conditional upon receipt of all applicable regulatory approvals, including approval of the TSXV. There can be no assurance that such listing will be completed.

Concurrent Financing

In connection with the Transaction, Pan American intends to complete a private placement of units (each a “Unit”) and subscription receipts (each a “Subscription Receipt”) at a price of $0.40 per Unit or Subscription Receipt, as applicable, for total aggregate minimum gross proceeds of $2,000,000 and maximum aggregate gross proceeds of $5,000,000 (the “Concurrent Financing”). Each Subscription Receipt will be deemed to be exchanged upon certain release conditions being met, without payment of any additional consideration, for one Unit. Each Unit will be comprised of one common share of Pan American and one-half of one common share purchase warrant (each whole warrant, a “Warrant”). Each Warrant will entitle the holder to purchase one common share of Pan American at a price of $0.60 for a period of two years from the Closing Date. The Warrants are subject to an accelerated expiry whereby if the volume weighted average trading price of Pan American’s common shares exceeds $0.95 for a period of 20 consecutive trading days, Pan American may provide notice to the Warrant holders of early expiry and the Warrants will expire on the date which is 30 days after the date of such notice.

The securities to be issued in the Concurrent Financing will be exempt from the prospectus and registration requirements of applicable securities laws in Canada. All such securities will be subject to a hold period of four months and one day from the date of closing of the Concurrent Financing.

In connection with the Concurrent Financing and the Transaction, Pan American may pay finder’s fees in cash, securities or a combination of both, up to the maximum amount permitted by the TSXV or CNSX, as applicable.

Pan American intends to use the proceeds of the Concurrent Financing to fund the costs of the Transaction and to fund the general working capital expenses of the resulting issuer.

Board of Directors

Upon completion of the Transaction, it is anticipated that the board of directors will consist of seven members, four of which will be nominees of Pan American and three of which will be nominees of Pacific Potash. It is currently expected that the board will be comprised of the following directors:

Randy Wright - Mr. Wright has over 30 years experience in oil & gas, construction, power generation and mining industries, much of this experience being in South America. He has founded, owned and operated several companies throughout the course of his career. Prior to becoming the President and CEO of Pan American, he owned a company primarily focused on providing oil and gas energy services which experienced growth in gross sales to $120 million.

Ben Wendland - Mr. Wendland comes from a background of construction and real estate development. Mr. Wendland combines work in the profit sector with leadership in the not-for-profit arena. Since developing a chain of business career training institutions, and leading a software company, Mr. Wendland is now CEO of a marine transportation company in Richmond, B.C., Hodder Tugboat Co. Ltd. Formerly chair of the Better Business Bureau of British Columbia. Mr. Wendland currently works with the ALS Society of Canada, Millennium Relief and Development Canada, as well as an orphanage in Uganda caring for 2600, Watoto Childcare Ministries.

Dean Pekeski - Mr. Pekeski is a Professional Geologist registered in the provinces of Manitoba and Saskatchewan. He is a graduate from the University of Western Ontario with over 17 years experience in mineral exploration. From April 1996 until March 2008, Mr. Pekeski was employed as an exploration geologist and project manager for Rio Tinto Exploration where he explored for base metal and diamond deposits across Canada, Southern Africa, and India. Mr. Pekeski's accomplishments include leading the Rio Tinto exploration team that discovered, and evaluated the diamondiferous Bunder kimberlites in India. His most recent responsibilities included managing Rio Tinto’s diamond exploration programs in North America. He currently manages Western Potash Corporation's Potash Exploration Programs.

Steve Khan - Mr. Khan currently serves as President, Director and Chairman of Strathmore Minerals and is a founder and former senior executive officer of Fission Energy as well as Director for several other TSXV listed companies. He is also a former senior executive of a number of Canadian national brokerage houses. Mr. Khan has initiated and managed major joint venture projects with Chinese and Korean and a Global Fortune 500 Japanese private Company. He has over 27 years of leadership in the global venture capital markets. He has earned a BSc. and MBA from UBC, and is a Chartered Financial Analyst.

Jody Dahrouge – Mr. Dahrouge currently serves as the Senior Vice President of Exploration and a Director for Pacific Potash Corporation, acting as the Company’s Qualified Person for the purpose of NI 43-101. Jody is a member of the Association of Professional Engineers, Geologists and Geophysicists of Alberta and British Columbia, and the President of Dahrouge Geological Consulting Ltd. He has over 20 years’ experience in asset analysis, M&A evaluation, and international mining exploration.

Carlos Fernandez Mazzi - Carlos H. Fernandez Mazzi is currently the CEO and Director of Dicon Gold, a private gold company focused on acquiring distressed production opportunities in Latin America. Carlos is also on the Board of Levon Resources leading the Project Development Committee for the Cordero project. Previously, Mr. Fernandez Mazzi was CEO of the William J. Clinton Foundation's Clinton Giustra Sustainable Growth Initiative, which has been financially backed by Frank Giustra and Carlos Slim Helu with an initial commitment of $100 million dollars each. Previously, Carlos, as local CEO, spearheaded the strategy, financing, and development of the San Cristobal silver mine in Bolivia. With over $1.0 billion of investment in one of the poorest districts in the country, this project gained international recognition for sustainable solutions to human development while building social capital by providing economic opportunities through social entrepreneurship initiatives.

Ignacio J. Randle - Ignacio Randle, working out of Buenos Aires, Argentina, advises domestic and foreign clients in international business transactions, transnational investment, and M&As, with emphasis in energy and natural resources projects. He is recognized globally as one of the world’s top mining lawyers. His mining practice covers exploration, development and production; including title review, due diligence, permitting, engineering, construction, operation, option, lease, royalty, purchase and joint-venture agreements, as well as mining-related compliance, litigation, tax, regulatory, private and public financing, employment, corporate, community and environmental health and safety matters. He received his law degree from the Catholic University of Argentina in 1986 and his Master in Laws (LLM) degree from the University of Chicago Law School in 1990. He practiced as a foreign attorney with Baker & Botts in Houston, Texas and in Washington, DC, and with McDermott, Will & Emery in Chicago, Illinois.

Bridge Loan

On September 13, the Company entered into a loan agreement with an arm’s length lender (the “Lender”), for a loan in the principal amount of $375,000, (the “Loan”). The loan carries an interest rate of 12% per annum and is payable on August 31, 2013 (the “Maturity Date”). The Loan is secured with a first priority general security over all of the assets of the Company. The Lender has the right to demand repayment from proceeds of any future equity financings completed by the Company. In the event of default, the Company is required to pay the Lender a $30,000 penalty in addition to the principal amount and any accrued interest.

As additional compensation for the Loan, the Company will issue 50,000 common shares of Pan American to the Lender on the earlier of (i) September 13, 2013; and (ii) the closing of any future financing. Such shares will be subject to a hold period of four months and one day from the date of issuance in accordance with applicable Canadian securities laws.

The purpose of the Loan is to provide the Company with general working capital.

About Pan American Fertilizer Corp.

Pan American is a Canadian company dedicated to providing fertilizer to a growing global market. The company is focused on the extraction of a specific type of fertilizer called calcium sulphate (also referred to as “Agricultural Gypsum”). To ensure long term development and increase shareholder value, Pan American currently plans to significantly expand its current operational objectives while expanding its asset base by acquiring additional calcium sulphate and other fertilizer related assets.

When used as a fertilizer and as a soil remediator, calcium sulphate is a soft sulfate mineral composed of calcium sulfate dihydrate which is extremely rich in sulphur and calcium. When dissolved in water, the mineral becomes calcium and sulphate sulphur ions, both of which are required nutrients for plants. Calcium sulphate plays a vital role in establishing and maintaining good chemical balance in soil, water and plants, specifically with healthy root development. Ultimately, calcium sulphate increases overall crop quality and yields.

About Pacific Potash Corporation
Pacific Potash Corporation trades on the TSXV under the symbol “PP”, as well on the OTCQX under the symbol “PPOTF” and on the Frankfurt Stock Exchange under the symbol “P9P”. Pacific Potash is engaged in the exploration and development of the Provost Potash Property and the surrounding potash claims targeting the prolific Prairie Evaporite Formation, which is host to multiple conventional and solution potash mines. The Company also has an option to acquire an 80% interest in Western Potash Corporation’s (TSX: WPX) Amazonas Basin claims.

On behalf of the board of directors of Pan American Fertilizer Corp.

“Randy Wright”

Randy Wright
President and CEO

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