Diamonds North Resources Ltd. (TSX VENTURE:DDN) and Uranium North
Resources Corp. (TSX VENTURE:UNR) ("the Companies") announce they
have entered into a Letter Agreement to amalgamate. The amalgamated
corporate entity will be called Adamera Resources Corp. with a
primary focus on its Washington State strategy to implement
aggressive and accelerated drill campaigns to discover high grade
gold deposits.
Rationale
The amalgamation of Diamonds North and Uranium North is logical
as the two companies currently hold the same material properties in
Washington State and they share management and exploration teams.
Both companies have independently concluded that it is of highest
priority to have these gold projects under unified ownership. It is
anticipated that a combined company will result in:
-- The formation of one of the largest exploration companies in Washington
State which should assist in attracting major company partnerships and
new prospective properties.
-- A much stronger share structure that will be more attractive to both
institutional and retail investors.
-- A simplified corporate organization with a unified strategic focus which
will lead to a distinct corporate identity.
-- A strong financial position to advance exploration on the Washington
State properties.
"I believe this proposed amalgamation will further develop a
discovery oriented corporate culture, garner market support,
accelerate exploration activity and ultimately lead to a
significant discovery," says Mark Kolebaba, President and CEO.
The Amalgamation
The respective boards of directors of Uranium North and Diamonds
North have approved a proposed amalgamation of the two corporations
pursuant to the provisions of the Business Corporations Act
(British Columbia).
The proposed amalgamation is subject to the approval of the
shareholders of Uranium North and Diamonds North and the approval
of applicable regulatory authorities. The amalgamating corporations
plan on holding special meetings of their respective shareholders
on such a date as agreed to with regulators to consider the
proposed amalgamation and matters related thereto. The proposed
amalgamation will require the statutory approval of at least two
thirds of the shareholders voting on the matters.
The amalgamated entity ("Amalco") will operate under the name
Adamera Resources Corp. or such other name approved by the
corporations and the regulatory authorities.
A joint information circular in respect of the special meeting
of shareholders of each of the amalgamating corporations will be
mailed to the shareholders when formal notices of the special
meetings are given.
In reviewing the proposed amalgamation, the independent members
of the board of directors of each of the amalgamating corporations
considered the merits and fairness of the transaction to its
shareholders. As a component of such review, Uranium North retained
Ross Glanville and Associates ("Glanville"), a qualified
independent financial advisor, to determine the fairness to the
shareholders of Uranium North of the proposed amalgamation with
Diamonds North. Diamonds North retained Bruce McKnight Mineral
Advisor Services ("McKnight"), a qualified independent financial
advisor, to determine the fairness to the shareholders of Diamonds
North of the proposed amalgamation with Uranium North. Copies of
the final fairness opinions to be delivered by the financial
advisors of the amalgamating corporations will be filed on SEDAR
prior to the special meeting of shareholders of each of the
amalgamating corporations.
Based on the preliminary fairness opinions of Glanville and
McKnight, the independent directors of the amalgamating
corporations determined the applicable share exchange ratios, for
which the existing common shares of the respective amalgamating
corporations will be exchanged for Amalco common shares. It is
contemplated that the proposed amalgamation will result in the
issuance of approximately 28.7 million Amalco common shares to
former shareholders of the amalgamating corporations based on the
following share exchange ratio:
i. for every one common share of Uranium North, shareholders will receive
0.2000 Amalco common shares, and
ii. for every one common shares of Diamonds North, shareholders will receive
0.1333 Amalco common shares.
In determining the common share ratio Glanville and McKnight
took into consideration the value of 5,189,281 common shares of
Uranium North which are held by Diamonds North but which will be
cancelled upon completion of the amalgamation in accordance with
the provisions of the Business Corporations Act (British Columbia).
The current issued and outstanding number of common shares of each
of the amalgamating corporations is as follows:
i. 85,555,405 common shares of Uranium North (including 5,189,281 common
shares held by Diamonds North), and
ii. 94,682,308 common shares of Diamonds North.
The amalgamating corporations intend that Amalco will adopt a
new 10% rolling stock option plan concurrent with the completion of
the amalgamation. A resolution for the adoption of the new stock
option plan will be presented at the special meetings and will be
subject to approval by a majority vote.
Highlights of the Combined Entity:
This business combination creates a strong technical company
focused 100% on prospective low operating cost on properties in
Washington State. The benefits of the combined company would
be:
-- 100% ownership of Washington State properties
-- Attractive consolidated share structure
-- Strong cash position
-- Strong technical capabilities
-- Improved trading liquidity
-- Consolidated management focused on unified exploration and marketing
efforts
-- Reduce administrative costs by as much as $500,000 per year
-- Clear and distinct corporate identity
-- Diversified prospective northern property portfolio
The Board of Directors will consist of Maynard Brown, Bernard
Kahlert, Mark Kolebaba, Geir Liland, and Yale Simpson. An
independent advisory board will be assembled and will include
Terrence Lyons, Bill Zimmerman, and Daniel Faure. The offices of
President and CEO will remain with Mark Kolebaba, Janice Davies
will continue as the Corporate Secretary, and Patricia Tanaka the
current CFO of Uranium North will continue as the CFO of the
amalgamated corporation. Mike Lee, current CFO of Diamonds North
has resigned as of December 31, 2012, we thank him for his
dedication and service for past the10 years.
The Washington State Strategy and Planned Exploration
Program
Washington State is historically a mining district known for
high grade gold deposits. The most recent mine development is the
Buckhorn mine which was completed in 2008 by Kinross. Kinross owns
the Kettle River Mill near the town of Republic. Kinross hauls
Buckhorn ore approximately 70 kilometres along major roads to their
mill which is currently operating at about 1/2 capacity. The
Buckhorn Mine, currently the only source of feed for the mill, has
an estimated 3 year mine life remaining. The amalgamated Company's
strategy is to find a high grade ore within trucking distance to
the mill.
"Washington State is not only a good fit for the Companies, it
is a good fit for the current economic conditions. This highly
prospective terrain has a history of high grade discoveries and the
existing infrastructure and nearby mineral processing facilities
allow for low cost exploration and ultimately low cost mine
development," says Mark Kolebaba, President and CEO.
Currently, the Companies hold 5 high priority properties in
Washington State that have indications of high grade
mineralization, are within 160 kilometres of a mill or smelter by
existing road and the climate allows for year round access. These
properties are Golden Reward, Poland China, Empire Creek, Alder
mine and Talisman.
For a comprehensive summary description of the material
properties currently held in Washington State and Northern Canada
by Diamonds North and Uranium North please see
www.diamondsnorth.com and www.uraniumnorth.com.
Upon completion of the amalgamation, initial programs will
commence on the Golden Reward and Poland China properties. The
Golden Reward program will consist of a 1000 metre drill program to
test the gold bearing structure at depth. This structure has never
previously been tested at depth. Estimated budget for the program
is $200,000. The Poland China program will incorporate additional
trenching followed by immediate drilling. Approximately 750 metres
of drilling is expected at an estimated cost of $150,000.
The material northern properties held by the combined company
will be held in good standing as long as permitted under Nunavut
and Northwest Territory regulation. Such properties will be
considered inventory properties that can be joint ventured, sold or
advanced by the company depending on future economy and market
conditions.
Legal Counsel and Auditor
Salley Bowes Harwardt LC is acting as legal counsel to both
companies and their respective Boards of Directors. Davidson and
Company are providing financial advice and audit services for both
Companies.
About Uranium North and Diamonds North
Diamonds North and Uranium North have had a strong northern
exploration focus and as a result, both companies have assembled
prospective northern projects in various commodities including
gold, diamonds, base metals and uranium.
Due to economic conditions and increased costs associated with
exploring in northern Canada, Diamonds North and Uranium North
recently formed an alliance through a US subsidiary Minerals North
LLC owned 50% by Diamonds North and 50% by Uranium North to explore
for high grade gold in Washington State.
Five high-priority Washington State properties have emerged from
the initial alliance, two of which are drill ready.
On behalf of the Boards of Directors,
Mark Kolebaba, President & CEO
Statements in this press release, other than purely historical
information, including statements relating to the Company's future
plans and objectives or expected results, may include
forward-looking statements. Forward-looking statements are based on
numerous assumptions and are subject to all of the risks and
uncertainties inherent in resource exploration and development. As
a result, actual results may vary materially from those described
in the forward-looking statements. Grams per tonne are noted as
g/t. All dollar amounts are expressed in Canadian dollars, unless
otherwise specified.
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release.
Contacts: Diamonds North Resources Ltd. Troy Shultz Manager,
Corporate Communications (604) 689-2010 (604) 484-7143
(FAX)info@diamondsnorth.com www.diamondsnorth.com / Twitter:
@diamondsnorth Uranium North Resource Corp. Heather Kays Manager,
Corporate Communications (604) 484-7120 (604) 484-7143
(FAX)info@uraniumnorth.com www.uraniumnorth.com / Twitter:
@uraniumnorth