TSTR.L Regulatory News (TSTR)

6 August 2013

Tri-Star Resources Plc ("Tri-Star Resources" or the "Company")

Proposed Acquisition of Portage Minerals Inc. and update on the Roaster project

Proposed Acquisition of Portage Minerals Inc.

The Company is pleased to announce that, further to the announcement made on 2 May 2013, the Company and its wholly owned subsidiary, Tri-Star Antimony Canada Inc. ("Tri-Star Canada"), have signed an amalgamation agreement with Portage Minerals Inc. ("Portage") (the "Amalgamation Agreement") for the acquisition of Portage (the "Acquisition") conditional upon, among other things, the requisite approval being obtained from Portage's shareholders. The Company believes that the Acquisition is an important step in the Company becoming an integrated antimony producer. Portage's Bald Hill deposit will contribute significantly to the Company's existing antimony exploration asset base, which together with the Company's Goynuk property in Turkey, will have the potential to deliver antimony concentrate to the Company's proposed roaster facility.

Under the Amalgamation Agreement, Tri-Star Resources and Portage have agreed to effect the Acquisition by way of a three cornered amalgamation between Portage, Tri-Star Resources and Tri-Star Canada pursuant to which Tri-Star Canada and Portage shall combine their businesses, assets and liabilities. In consideration for the amalgamation, Portage shareholders (other than dissenting Portage shareholders) will receive 7.159849116794373 ordinary shares of 0.005p each in the capital of Tri-Star Resources ("Tri-Star Shares") for every one Portage share held, with the total number of Tri-Star Shares received by each Portage shareholder being rounded down so that no fractional Tri-Star Shares are issued. Pursuant to the Amalgamation Agreement, Tri-Star Canada and Portage will be amalgamated and will continue as one company ("Amalco"). Each of Tri-Star Canada and Portage will cease to exist as entities separate from Amalco. Amalco will continue with the name Tri-Star Antimony Canada Inc. and will be a wholly owned subsidiary of Tri-Star Resources. Assuming there are no dissenting Portage shareholders, Tri-Star Resources will issue to Portage shareholders a total of approximately 1,086 million new Tri-Star Shares with a value of GBP2.8 million (based on the closing mid-market share price of Tri-Star Resources on 5 August 2013 of 0.26 pence). Assuming no dissenting Portage shareholders, following completion of the Acquisition, Portage shareholders will hold approximately 15.9 per cent of the issued share capital of Tri-Star Resources at that time.

The Acquisition is conditional, inter alia, on the approval of the Amalgamation Agreement by a two thirds majority of Portage shareholders voting at the Portage shareholder meeting that is expected to be convened in Toronto for 12 September 2013 at 10.00 a.m. (3.00 p.m. London time). Completion of the Acquisition and admission of the new Tri-Star Shares to trading on AIM is expected to take place on or around 18 September 2013.

Portage was incorporated in 2006 as a junior mining exploration and development company engaged in the acquisition, exploration and development of mineral prospects in Canada and the United States of America. Following its amalgamation with Rockport Mining Corp. ("Rockport") in November 2011, Portage became a mineral exploration company, exploring for antimony and gold in eastern Canada. The common shares of Portage currently trade on the Canadian National Stock Exchange under the trading symbol "RKX".

Portage owns the Bald Hill deposit, which is one of the largest undeveloped antimony projects in Canada. As outlined in the NI 43-101 technical report for Bald Hill, drilling to date has indicated a potential quantity and grade, which is the target of further exploration, in the 725,000 to 1,000,000 tonne range grading 4.11% to 5.32% contained antimony. Exploration surveys have defined a 1km long extension to the mineralized zone which remains open in all directions. The potential quantity and grade is conceptual in nature as there has been insufficient exploration to define a mineral resource and it is uncertain whether further exploration will result in the target being delineated as a mineral resource. In addition, Portage owns 100% interest in 891 claims within the Annidale Gold Belt, which covers approximately 200 sq km surrounding the Bald Hill deposit and which hosts a number of historic gold and antimony occurrences.

In addition, Portage has interests in two gold deposits, both of which are NI 43-101 compliant. The first of these, Golden Pike, which is 100 per cent. owned by Portage, has an inferred mineral resource of 214,800 tonnes grading 9.6 grams per tonne ("g/t") for 66,300 ounces of contained gold and the second, Golden Ridge, in which Portage has a 60 per cent. interest (under a joint venture with Cliffs Chromite Resources Inc.), has inferred mineral resources of 17,780,000 tonnes at 0.91 g/t gold for 520,200 ounces of gold. Both of these gold projects are viewed as non-core by Tri-Star Resources.

Portage has other earlier-stage gold and base metal properties including Armstrong Brook, Oak Bay, Mount Pleasant NE and Otter Lake.

As at 30 April 2013, Portage had total assets of CDN$0.902 million (GBP0.577 million) and net liabilities of CDN$1.021 million (GBP0.653 million) and Portage made a net loss of approximately CDN$0.822 million (GBP0.526 million) in the year ended 31 January 2013, and a net loss of CDN$0.342 million (GBP0.219 million) in the three months ended 30 April 2013.

Completion of the Acquisition is also conditional, inter alia, upon the following:

·; the representations and warranties given by Portage and by Tri-Star Resources pursuant to the Amalgamation Agreement remaining true and accurate in all material respects at completion;

·; there being no material adverse change affecting Portage or Tri-Star Resources before completion;

·; the exercise, termination or release of options held over Portage;

·; the agreement of certain creditors of Portage (that are related parties to Portage) to settle outstanding claims against Portage;

·; receipt of approval of the Amalgamation by Portage from the Canadian National Stock Exchange; and

·; application being made for the admission of the new Tri-Star Shares to be issued to the Portage shareholders and creditors to trading on AIM.

In connection with the annual and special meeting of Portage Shareholders expected to be held on 12 September 2013 to approve, among other things, the Acquisition, Portage will file an Information Circular with Canadian securities regulators, containing certain information on Tri-Star Resources and the Acquisition, which will be posted to Portage shareholders on or about 14 August 2013 and which will be available on Tri-Star Resources' website at that time.

Under the provisions of the Canadian Business Corporation Act, as amended, (the "CBCA") each Portage shareholder may exercise his or her right of dissent from the Amalgamation Agreement by duly notifying Portage of this fact prior to, or at the time of, the shareholder meeting. Failure to comply with the dissent procedures set out in the CBCA may result in the loss of any right to dissent and any registered Portage shareholder who might wish to dissent should carefully review the dissent provisions and consult his or her legal adviser. Each Portage share held by a dissenting Portage shareholder shall, as part of the amalgamation, be deemed to be transferred by the holder to Amalco and Amalco shall be obliged to pay fair value to the holder for such Portage shares (by reference to the market price of a Portage share immediately prior to the Amalgamation) in cash. If the number of dissenting shareholders represents greater than 5 per cent. of the outstanding Portage shares then Tri-Star Resources is not obliged to complete the Acquisition.

On completion of the Acquisition, Tri-Star Resources will become a reporting issuer in each of Ontario, Alberta and British Columbia and will be subject to the continuous disclosure requirements of the relevant Canadian regulations in those jurisdictions. In particular, this will require Tri-Star Resources to disclose quarterly financial information.

The executive officers of Amalco upon completion of the Acquisition will be Emin Eyi (President and Secretary), Ken Hight (Chief Executive Officer) and Brian Spratley (Chief Operating Officer).

Pursuant to the Letter of Intent announced on 2 May 2013, the Company paid an initial exclusivity fee of CDN$50,000 (GBP32,000) immediately and since then has made three further monthly exclusivity payments of CDN$25,000 (GBP16,000) each to Portage. A further payment of CDN$85,000 (GBP54,000), which will be satisfied by the issue of 14 million Tri-Star Shares to creditors of Portage, will be made upon completion of the Acquisition.

Upon completion of the Acquisition, Amalco will assume the liabilities of Portage, which are expected to consist of: (i) short term liabilities to related party creditors of Portage of CDN$400,000 (GBP256,000), which will be discharged on closing by a cash payment by Tri-Star Resources of CDN$300,000 (GBP192,000) together with the issue of a further 20 million new Tri-Star Shares to the creditors; (ii) promissory notes issued by Portage to certain trade creditors amounting to approximately CDN$454,000 (GBP290,000) which will need to be satisfied by Amalco within 30 days of completion of the Acquisition; (iii) a provision for approximately CDN$344,000 (GBP220,000) which represents the full amount of a claim being brought against Portage by a former director and officer of Rockport relating to consultancy fees payable under a services agreement (the "Claim"). The Claim has been vigorously defended by Portage and is in arbitration. Until the arbitration has been completed the amount of the Claim to be paid remains unknown; and (iv) a provision for CDN$52,000 (GBP33,000) for accrued holiday pay for Portage's current employees.

Subject to completion of the Acquisition, admission of the additional 34 million new Tri-Star Shares (which have a value (based on the closing mid-market price of Tri-Star Shares on 5 August 2013) of GBP88,000 (CDN$138,000)) to be issued to creditors of Portage to trading on AIM is expected to take place on or around 18 September 2013.

There are outstanding warrants over approximately 8,904,589 Portage shares which will remain outstanding following the amalgamation (unless exercised beforehand) and which, if exercised following the amalgamation, will be satisfied by the issue of approximately 63,755,514 Tri-Star Shares. The warrants have exercise prices of between 2.4p and 5.2p per Tri-Star Share and expire at various times upto September 2014.

On completion of the Acquisition and subject to the completion of customary due diligence, it is intended that Ken Hight, Chairman and CEO of Portage, will join the board of Tri-Star Resources as an Executive Director under a letter of appointment to be entered into with effect from completion of the Acquisition. The agreement will continue from appointment until terminated upon the occurrence of, inter alia, one month's notice from either party or termination of the consultancy agreement described below. No fees are payable under the letter of appointment.

In addition, on completion of the Acquisition, Amalco, 1405875 Ontario Inc. (a consulting company owned by Ken Hight) and Ken Hight, will enter into a consultancy agreement (the "Consultancy Agreement") under the terms of which 1405875 Ontario Inc. will provide the consulting services of Ken Hight with effect from completion of the Acquisition. The Consultancy Agreement will provide for monthly compensation of $15,000 (£9,600) per month for an initial term of 12 months with an automatic renewal for successive 12-month terms unless any party gives not less than three months notice of non-renewal or termination other than for cause (except that Amalco may not give notice of termination other than for cause during the initial 12 month term and, if Amalco is the non-renewing or terminating party, it will be obligated to pay the other party a payment equal to 12 months base compensation if the termination notice is given in the initial term, or a payment equal to six months base compensation if the termination or non-renewal notice is given in a subsequent term). The Consultancy Agreement also provides for the award of a cash bonus at the sole discretion of Amalco. 1405875 Ontario Inc. and Ken Hight shall report to the board of Amalco and both shall comply with the provisions of the AIM Rules for Companies and the Company's corporate governance requirements.

Further, on completion of the Acquisition, 13,900,000 options over Tri-Star Shares will be issued fully vested to Ken Hight with an exercise price of £0.005 per share and an expiry date of 31 December 2017 under and in accordance with the terms of the Tri-Star Resources share option scheme.

Update on the Roaster Project

The Company has announced previously that it has established a joint venture in Ras Al-Khaimah with Union International Holding Group ("Union") for the construction of its proposed antimony roaster facility. The Company confirms that negotiations are ongoing with Union and other potential joint venture and financing parties in the Gulf region with a view to securing the final location of, and financing for, this project.

Emin Eyi, the Company's Managing Director, has relocated to the Gulf so as to be able to manage the roaster project more effectively.

Commenting on the Portage Acquisition, Emin Eyi said:

"I am delighted that we have been able to sign the Amalgamation Agreement for the acquisition of Portage and look forward to completing the Acquisition following the Portage shareholders' meeting in September. Portage's Bald Hill property has the potential to become a significant antimony producing mine which, together with our Goynuk property in Turkey, will have the potential to deliver antimony concentrate to our proposed roaster facility."

Enquiries:

About Tri-Star Resources

Tri-Star Resources is a focused antimony company whose management has many years experience in trading and mining this critical mineral. The Company's objective is to become the leading integrated antimony metal and products manufacturer to western economy consumers utilising a new technical and environmentally advanced 20,000 tonnes per annum name plate capacity antimony metal and tri-oxide production facility in the Middle East, with raw material supplied from its upstream resource projects in Turkey and Canada and from third party producers.

Further information is available at www.tri-starresources.com.