Goldsource Mines Inc. ("Goldsource" or the "Company") (TSX VENTURE:
GXS) (FRANKFURT: G5M) and Zero Emission Energy Plants Ltd (ZEEP)
are pleased to report that they have entered into a binding Letter
of Intent ("LOI) for a business combination (the "Transaction")
whereby the two companies would merge.
Goldsource is a publicly listed Canadian resource company
engaged in the exploration and development of Canada's newest coal
field in the province of Saskatchewan. Goldsource is responsible
for recently identifying one of Canada's most promising new coal
deposits, in Eastern Saskatchewan and to date has outlined coal
resources of more than 170 million tonnes of good quality, sub-
bituminous thermal coal (see below for categories). Headquartered
in Vancouver, BC, the Company is managed by experienced mining and
business professionals.
ZEEP is a private Bermuda company at arm's length to the Company
with worldwide rights to a leading and state of the art
gasification technology developed by the Pratt & Whitney
Rocketdyne ("PWR") division of United Technologies Inc.. The
technology is able to convert heavy hydrocarbons, such as the
Goldsource coal, into clean transportation fuels and chemicals
while largely eliminating pollutants. Industry has used
gasification technology and equipment to transform heavy
hydrocarbons for nearly 50 years, but the PWR technology eliminates
virtually all of the issues commonly encountered with the older
generation equipment. The PWR technology has undergone extensive
testing at a pilot plant located in Chicago, Illinois that has been
supported by the US Department of Energy, Alberta Energy Research
Inc. (AERI) and ExxonMobil. ZEEP has partnered with PWR in the
advancement of the new technology and as the commercialization
partner, is exploring opportunities for installations of the
technology around the world. ZEEP is managed by a team of
professionals with extensive experience in gasification
technologies and the acquisition and development of large energy
projects. ZEEP has offices in Houston, Calgary, Beijing China and
Sydney Australia. (for further information please go to
www.ZEEP.com )
Letter of Intent
The obligations of Goldsource and ZEEP to complete the
Transactions contemplated in the LOI will be subject to, among
other things, negotiation of definitive documentation (the
"Transaction Documents") which will contain the terms and
conditions set out in the letter agreement and such other terms and
conditions as are customary for transactions of the nature
contemplated by the LOI.
Pursuant to the LOI, the parties will complete the Transaction
on the basis that for each Goldsource common share a Goldsource
shareholder will receive 1.2727shares of the combined entity
("NEWCO") and each ZEEP shareholder will receive one share for each
of their ZEEP shares. NEWCO will have approximately 154.8 million
shares issued and outstanding and approximately 183.0 million
shares on a fully diluted basis after giving effect to a financing
of US$10 million to be completed by ZEEP prior to closing of the
Transaction. Goldsource and ZEEP shareholders will hold
approximately 23.4% and 76.6% respectively of NEWCO.
The contemplated Transaction will be classified as a reverse
take-over under the policies of the TSX Venture Exchange and will
be subject to a number of conditions including, but not limited to,
receipt of all required regulatory approvals, the receipt of a
fairness opinion, board of directors and shareholder approval and
the completion of such due diligence as necessary to satisfy each
of Goldsource and ZEEP as to their respective financial condition,
assets, corporate records, business operations and any other
affairs of the other party deemed necessary. ZEEP will also be
continued under the Business Corporations Act (Alberta) and be
required to complete a financing of approximately US$10 million
from arm's-length third party investors.
Trading in the Company's shares will be halted on the TSX
Venture Exchange until the conditions required by the TSX-Venture
Exchange for reinstatement of trading have been met. The parties
have agreed to complete the requirements for reinstatement of
trading on the TSX Venture Exchange in a timely fashion so that
trading of Goldsource shares may resume. The target date for
completion of the Transaction is expected to occur in the fourth
quarter of 2011 following a meeting of the Goldsource
shareholders.
J. Scott Drever, President of Goldsource stated; "We are
extremely pleased with this proposed combination in that gives
Goldsource shareholders an excellent opportunity to have the real
value of our Saskatchewan coal resources recognized. We are aware
that monetizing the value of this our coal assets is a significant
challenge and now Goldsource will be able to achieve this by
combining our coal resource with the best, new clean energy
technologies currently available in the industry." He also went on
to say that, "the combination of Goldsource and ZEEP will also
provide Goldsource shareholders with participation in a number of
clean energy, project developments through a truly world class
management team with the capabilities to complete the development
of our mine and construct a major clean energy center in
Saskatchewan as well as in many other locations around the
world."
Ron Oligney, CEO of ZEEP, stated that he's also excited by the
combination of the two Companies. "The combination of PWR's game
changing gasification technology and Goldsource's promising
Saskatchewan coal resource will allow us to create one of the
world's best industrial clean-tech stories". He went on to say,
"The management team at ZEEP has long believed that with the right
application of technologies like the PWR gasifier, heavy
hydrocarbons like coal, petroleum coke and biomass can be a
significant portion of our energy supply mix in the future. Coal is
one of the world's most abundant forms of energy and there's
nothing wrong with using it as long as we apply the innovation that
allows it to be used in an environmentally friendly manner. He went
on to say, "with the Goldsource coal, and the use of the PWR
gasification technology the merged company can become a leader in
the advancement of clean coal energy projects."
Completion of the transaction is subject to a number of
conditions, including Exchange acceptance and disinterested
shareholder approval. The transaction cannot close until the
required Shareholder approval is obtained. There can be no
assurance that the transaction will be completed as proposed or at
all. Investors are cautioned that, except as disclosed in the
Management Information Circular to be prepared in connection with
the transaction, any information released or received with respect
to the reverse take-over may not be accurate or complete and should
not be relied upon. Trading in the securities of the Company should
be considered highly speculative. The TSX Venture Exchange has in
no way passed upon the merits of the proposed transaction and has
neither approved nor disapproved the contents of this press
release.
2011 Drill Programs
Goldsource is also pleased to report that preparation is
underway for its summer drill program to commence in August at its
wholly-owned Border Project ("Border") located near Hudson Bay,
Saskatchewan. The purpose of the summer program will be to test
several geophysical anomalies for potential expansion of its coal
resources. A second phase will be to collect a bulk coal sample for
a variety of test work with respect to coal-to-liquids,
gasification, power plant application and upgrading of the coal for
transport will likely be carried out after freeze-up once the scope
of test work for the ZEEP technology is determined.
The first part of the program will consist of 5 to 10 core holes
(near road and helicopter-supported) to test 3 significant
geophysical anomalies which have been identified using the
Company's proprietary proven Coal Identification Matrix (CIM). One
target is approximately 5 km by 5 km and may contain a large coal
resource near road and rail. The other 2 targets are both greater
than 1 km by 1 km with potential to contain significant coal
resources. Please see attached map for target and drill hole
locations. http://media3.marketwire.com/docs/711gxs_map.pdf
The second part of the program will consist of approximately
10-20 large diameter core holes to collect a representative bulk
coal sample for test work at various labs and the ZEEP pilot plant.
This test work will provide additional quality information with
respect to its usage for coal to liquids, gasification, power plant
application or upgrading for transport. The most feasible
technology for the Border coal at this point appears to be coal to
liquids or gasification.
The Company's resource estimates were recently revised as part
of the Preliminary Assessment completed by Marston Consultants and
EBA Engineering Consultants Ltd (a Tetra Tech company). The Company
expects to increase the overall tonnages and upgrade the resources
in the speculative and inferred categories with the upcoming drill
program. The addition of the Niska 105 deposit accounted for much
of the increase to the speculative category but airborne gravity
surveys shows that the target is much larger than initially
believed and that the single coal intercept of 37 metres was near
to the northeastern end of the deposit. There are a number of
priority targets yet to be tested that could add to the overall
resource base of the area.
Coal Resources at the Border Project
----------------------------
Category 2011 Tonnes
----------------------------
Indicated 79,161,000
----------------------------
Inferred 33,003,000
----------------------------
Speculative 61,183,000
----------------------------
Applications have been submitted to the Ministry of Energy and
Resources, Saskatchewan for conversion of existing coal exploration
permits to coal leases which can be maintained by paying annual
lease rentals of $5.5 per hectare. The leases will have an initial
term of 15 years. The Company has applied to retain approximately
56,000 hectares under lease which will cover all current coal
resources, exploration targets and road and rail
infrastructure.
N. Eric Fier, CPG, P.Eng. and Qualified Person for this news
release has reviewed and approved its contents.
Goldsource Mines Inc. is a Canadian resource company engaged in
the exploration and development of Canada's newest coal field in
the province of Saskatchewan. The Company has aggressively drilled
only a portion of this new thermal coal field and has discovered 17
coal deposits of varying size with coal zone thicknesses up to 126
meters within the permit area of the Border Coal Project.
Headquartered in Vancouver, BC, the Company is managed by
experienced mining and business professionals.
This news release contains forward-looking statements, which
address future events and conditions, which are subject to various
risks and uncertainties. The Company's actual results, programs and
financial position could differ materially from those anticipated
in such forward-looking statements as a result of numerous factors,
some of which may be beyond the Company's control. These factors
include: the availability of funds; the timing and content of work
programs; results of exploration activities and development of
mineral properties, the interpretation of drilling results and
other geological data, the uncertainties of resource and reserve
estimations, receipt and security of coal permits and mineral
property titles; project cost overruns or unanticipated costs and
expenses, fluctuations in commodity product prices; currency
fluctuations; and general market and industry conditions.
Forward-looking statements are based on the expectations and
opinions of the Company's management on the date the statements are
made. The assumptions used in the preparation of such statements,
although considered reasonable at the time of preparation, may
prove to be imprecise and, as such, undue reliance should not be
placed on forward-looking statements.
J. Scott Drever, President
GOLDSOURCE MINES INC.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this
release.
Contacts: Goldsource Mines Inc. Fred Cooper (604) 694-1760 or
1-866-691-1760 (Canada & USA) (604) 694-1761 (FAX)
info@goldsourcemines.com www.goldsourcemines.com
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