TORONTO, ONTARIO, Jun 16, 2010– Castillian Resources Corporation (“Castillian” or the “Company”) is pleased to announce that the Company has entered into a letter agreement with Innovance Limited (NSX: IVL) (“Innovance”) pursuant to which Innovance will acquire a 100% interest in Castillian’s Kagera Nickel Sulphide Project (“Kagera Project”) located in northwest Tanzania. The Kagera Project comprises mineral rights to six properties totaling 960 km2 in the highly prospective Kabanga-Musongati mafic-ultramafic belt. The key licences are located directly adjacent to the important nickel sulphide Kabanga Nickel Deposit, the largest undeveloped high grade nickel sulphide deposit in the world. The Kabanga Nickel Deposit is currently undergoing feasibility studies in a 50:50 joint venture between Xstrata Nickel (the operator) and Barrick Gold.
Innovance is a public Australian exploration and development company that will focus on exploration and development of the Kagera Property and evaluate other mining projects that have potential to increase value to its stock holders.
Dr. Bill Pearson, P.Geo., President & CEO of Castillian commented: “This is a very beneficial transaction for Castillian. It will provide funds to continue exploring Kagera while providing Castillian with excellent exposure to the potential upside of the project through ownership of Innovance shares. It will allow us to focus on our core gold projects in particular the Hope Brook Gold Project in Newfoundland. The agreement provides for a significant exploration program to advance the Kagera project and significant participation for Castillian in the benefits of any important discoveries.”
Under the terms of the agreement, Castillian will receive the following consideration (post share consolidation):
— 5 million fully paid ordinary shares in Innovance;
— 7.5 million performance shares in Innovance, convertible into ordinary shares upon the drilling of 3 holes with a minimum 4 metres intersection grading at least 1% nickel within 3 years of being issued;
— 7.5 million performance shares in Innovance, convertible into ordinary shares upon the completion of an independent JORC compliant Mineral Resource estimate of not less than 5.000,000 tonnes of nickel with a grade of not less than 1% nickel insitu or equivalent within 5 years of being issued; and
— 7.5 million performance shares in Innovance, convertible into ordinary shares upon the completion of an independent JORC compliant Mineral Resource estimate of not less than 10,000,000 tonnes of nickel with a grade of not less than 1% nickel insitu or equivalent within 5 years of being issued.
Completion of the transaction shall remain conditional, among other things, upon the following:
— Innovance completing due diligence investigations to its satisfaction;
— Receipt of all regulatory approvals on behalf of Innovance, including but not limited to, receipt of all shareholder approvals with respect to the transaction and the approvals required with respect to the proposed consolidation of the Innovance common shares on the basis of one new common share for every two old Innovance shares.
— Innovance cancelling all existing treasury options;
— Innovance completing a financing in the minimum amount of A$2,000,000 through the issuance of a minimum of 10 million post-consolidated shares at an issue price of A$0.20 per share; and
— Innovance receiving approval from the Australian Stock Exchange to list upon completion of this transaction.
Upon completion of the share consolidation and the proposed financing, Innovance will have approximately 24 million issued and outstanding shares and 7.5 million options (excluding any performance shares issued to Castillian) with approximately A$3-4 million in cash upon completion of the transaction.
Following the completion of the transaction, Castillian shall obtain the right to appoint at least two directors to the Innovance Board, including Mr David Gower and Mr David Argyle., the Chairman and a Director of the Company, respectively.
Dr. Bill Pearson, P.Geo., President and CEO of Castillian and Mr. David Gower, P.Geo., Director , both of whom are qualified persons as defined by National Instrument 43-101, have reviewed and approved the technical content of this press release.
Castillian Resources Corp. is a Canadian mineral exploration company listed on the TSX Venture Exchange under the symbol “CT” which has gold and base metal properties in Canada, South America and Tanzania.
Cautionary Note Regarding Forward-looking Information
This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the future financial or operating performance of the Company, its subsidiaries and its projects, statements regarding the completion of the transaction, the ability of the parties to complete the transaction based on the terms described herein, exploration prospects, the identification of mineral reserves and resources, costs of and capital for exploration projects, exploration expenditures, timing of future exploration, requirements for additional capital, government regulation of mining operations, environmental risks, reclamation expenses, title disputes or claims, limitations of insurance coverage and the timing and possible outcome of pending litigation and regulatory matters. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, political and social uncertainties; acquisition risks, the actual results of current exploration activities; delay or failure to receive board or regulatory approvals; timing and availability of external financing on acceptable terms; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of mineral prices; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and shortages and other risks of the mining industry; and, delays in obtaining governmental approvals or required financing or in the completion of activities. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.
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