Alien Metals Regulatory News (UFO)

3 May 2006 07:00

Hard Assets Inc03 May 2006 HARD ASSETS INC. ("Hard Assets" or the "Company") HARD ASSETS INC. TO MERGE WITH ARIAN SILVER CORPORATION LIMITED Proposed continuation of the Company into the B.V.I. Proposed change of name of the Company to Arian Silver Corporation Proposed merger of Arian Silver into the Company Application for re-admission to trading on AIM Notice of Extraordinary General Meeting LONDON, 2 May 2006 - Further to the announcement on 16 March 2006 regarding thesuspension of trading in the existing common shares of the Company ("CommonShares") on AIM, the directors of Hard Assets (the "Directors") have agreedterms to merge the privately held Arian Silver Corporation Limited ("ArianSilver") into the Company, subject to shareholder approval (the "Merger"). TheMerger will form a company with a portfolio of silver exploration anddevelopment projects in Mexico and a board of directors with considerableexperience in the exploration for and development of precious and base metals.The Company and its subsidiaries following the Merger (the "Enlarged Group") will aim to develop its portfolio of projects towards production, along with any other projects it may acquire, through a combination of company development and/or joint venture/acquisition opportunities. Arian Silver shareholders will be issued with 48,899,200 common shares (the "NewCommon Shares") as part of the Merger and will hold 56.65 per cent. of theEnlarged Group on Admission. Holders of options and warrants over shares inArian Silver will receive, respectively, options and warrants over a further8,729,600 Common Shares. In view of its size, the Merger will constitute areverse takeover of the Company under the AIM Rules and therefore requires theapproval of Shareholders at an extraordinary general meeting. The Merger is alsoconditional, inter alia, upon the continuation of the jurisdiction of theCompany to the British Virgin Islands (the "Continuation") being approved at theextraordinary general meeting of the Company, and upon admission of the CommonShares and the New Common Shares to trading on AIM. In addition, the directors have determined that they will not proceed with theContinuation or Merger if, prior to the holding of the extraordinary generalmeeting, the Company or Arian Silver has received dissent notices to theContinuation or the Merger and any of the value of the aggregate considerationto be paid in respect of such dissent notices exceeds £200,000 or in thereasonable opinion of the Directors is likely to exceed £200,000. Jim Williams, Arian Silver Chief Executive, commented: "We welcome the merger with Hard Assets; this will enable us to achieve our goalof bringing Arian Silver to AIM as well as providing us with a largerinternational investor base. This transaction gives us a sound base for ourproposed exploration programmes, including exploratory development, at ourCalicanto and San Celso properties, where initial results have been veryencouraging. In addition, we are in negotiations to secure tailings projectswhich have the potential to generate near-term cash-flow. Our initial target isto have in excess of 50 million JORC-compliant ounces of silver. We anticipatecontinuing strength in the market for silver and aim to establish Arian SilverCorporation as the prime silver play on the UK market." ARIAN SILVER AND ITS BUSINESS AND STRATEGY The Arian Group (Arian Silver and its two subsidiaries) holds 12 mineralconcessions covering an aggregate area of approximately 1,493 ha, has optionsover 7 other mineral concessions covering an aggregate area of approximately 298ha and is in negotiations for an option over 3 further mineral concessionscovering an aggregate area of approximately 1,652 ha, all in the Zacatecas Stateof Mexico. To date, Arian Silver has been funded through a number of private placings, themost recent of which completed on 7 April 2006 raising US$2 million beforeexpenses through the placement of 4,000,000 Arian Shares at US$0.50 per share.This US$2 million, together with the Company's and Arian's existing cash, willbe used to fund the costs of the Merger and to partially fund the EnlargedGroup's proposed exploration programmes. The Arian Group's concessions can be broadly grouped into three geographicalzones within Zacatecas State, namely the Zacatecas area, Ojocaliente area, andSombrerete area. ZACATECAS AREA There are two groups of concessions in the Zacatecas district: Calicanto, whichlies to the north of Zacatecas, and Los Campos to the south. A number are"brown-field" sites where some past exploratory work has been undertaken andgenerally have some mine infrastructure in place. All these properties are ondifferent veins within the La Cantera System. Calicanto The Calicanto project comprises three concessions, which are under option,covering an area of approximately 45 ha and includes the past productive NevadaCalicanto epithermal vein system which is situated about 5 km north of thecentre of Zacatecas City, adjacent to the Barones silver vat leaching operation.The Calicanto and Nevada veins are part of a west-north west trending veinsystem extending throughout the Zacatecas area. The veins are connected by oldworkings and were mined together in the past. During 2005 Arian Mexico extended the decline to access the Calicanto vein andunderground workings. A channel sampling programme was initiated in August 2005.Mapping and sampling is ongoing as the decline is advanced along strike. Theaverage width of the vein itself is 1.5 to 2.0 metres but with the inclusion ofthe stockwork and/or parallel veins in the hanging wall, the overall width ofthe structure can exceed 5 metres. Assays returned during the final quarter of2005 proved better than results from an earlier sampling by another company.These variations are typical within epithermal precious metals systems. Theproperty has not been drilled and it is believed that an area unmined above thecurrent water table near the Calicanto shaft has potential for definingJORC-compliant resources by a combination of surface drilling and undergroundwork. A 2,100m drilling programme is planned for 2006, subject to the Companyraising additional funds. Based on available mine plans, it appears that the Calicanto vein washistorically worked on three levels: the 130 m, 175 m and the 205 m levels. Onthe 130 m level, the vein appears to have been worked over 225 m of strike, onthe 175 m level, the vein appears to have been worked over 200 m of strike, andon the 205 m level, the vein appears to have been worked over 195 m of strike.It is difficult to say how much mining has taken place above the 130 m level butthe Arian Group estimates that approximately 160 m of the vein has been minedalong strike. The overall potential strike length within Arian Mexico'sconcessions is 880 m. Arian Mexico has an option over the 3 concessions at the Calicanto project.Under the option agreement, Arian Mexico is required to make staged paymentstotaling US$40,000 to Juan Mayorga Murillo for the right to explore the areacovered by the concessions during the period of the option and can exercise theoption at any time until 25 April 2008 at an exercise price of US$340,000 (lessany staged payments paid). Juan Mayorga Murillo is not currently the registeredowner of the Calicanto concessions as the registration of his title is subjectto certain transfers being registered and testamentary proceedings in relationto his father's estate. Under the terms of the option, Juan Mayorga Murillo isunder an obligation to acquire those interests in the concessions which arecurrently subject to his father's estate and register all his rights with thePublic Registry of Mines in Mexico. Juan Mayorga Murillo is also entitled to a 3 per cent. smelter royalty. LOS CAMPOS The Los Campos project comprises four concessions wholly owned by Arian Mexicocovering an area of approximately 500 ha located on the south side of the cityof Zacatecas. The target area can be easily accessed within 15 minutes' drivefrom Arian Mexico's offices via a paved bypass road between Guadalupe andZacatecas. The target area incorporates the Los Campos, La Virgen, Dolka and SanVicente mines, which were productive in colonial times. Future exploration willbe to depths below levels of colonial mining and portions of the epithermalveins have yet to be evaluated by drilling. In addition, a currently unknown quantity of mineralised dump material exists atvarious surface localities within the area covered by these concessions whichthe Proposed Directors plan to evaluate. OJOCALIENTE AREA The Ojocaliente project area covers a number of geographically separate silvervein (epithermal) and replacement (skarn) occurrences about 50 kilometres (lessthan one hour's drive) southeast of Zacatecas. SAN CELSO San Celso is situated about 50 kilometres southeast of Zacatecas, near the townof Panfilo Nateras. Access is by paved highway to Aguascalientes, which passesthrough the small settlement of Ojocaliente. The San Celso concessions arewholly owned by Arian Mexico and comprise two concessions which are groupedaround the east-facing slope of a prominent volcanic neck over an area ofapproximately 43 ha (San Celso and Ampl. San Celso) and one concession coveringan area of approximately 45 ha (El Morro). The concessions cover numerous typical epithermal silver veins, which were minedin colonial times. Arian Mexico has most advanced its San Celso property compared with its otherconcessions, where it has accessed and re-laddered two workings: the San Celsomine to approximately 130 metres and since the competent person's visit the LasCristinitas workings to approximately 100 metres depth. Historic mining appearsto have been focused on near surface (to 130 metres) high grade shoots, with thesilver extracted probably using a simple amalgamation process. Arian Mexico is currently engaged in a detailed mapping and sampling programme.Mineralisation is found in both the hanging wall and footwall of the main veinsand in places can be up to 6 metres in thickness. The work conducted by ArianMexico has identified a number of mineralised veins. In the San Celso mine, themine workings explore two mineralised structures one being approximately 2-4metres and the other being approximately 15 metres away from the main vein,separated by weakly mineralised altered granodiorites. Arian Mexico's geological exploration and mapping suggests that in the LasCristinitas workings, the previous workings exploited a narrow (0.7-1.5 metreswide) high-grade silver vein. However, massive calcite-quartz veining has beenidentified in the hanging wall and footwall to the Las Cristinitas vein thatcarried variable amounts of silver. The potential of the San Celso property is thought to lie in the extension ofthese veins along strike and to depth. It is also possible that there are othermineralised structures, either partially exploited by the San Celso old mineworkings or undiscovered, on the property. LA AFRICANA The La Africana and Ampliacion El Cabezon concessions are wholly owned by ArianMexico, cover an area of approximately 15 ha and are situated about 3 kilometressouth-west of Panfilo Natera, just off the paved highway. The concessions covera small hill, with numerous small shafts and dumps, and silver veinmineralisation within the dump material. The well-known Bilbao skarn replacementbody is situated to the north as are other vein systems. DONOVAN 1 The Donovan 1 concession, which is wholly owned by Arian Mexico, coversapproximately 42 ha of agricultural land near the small settlement of RanchoNuevo, situated between Panfilo Natera and El Morro. Small sub-crops and floatboulders of epithermal and skarn hosted mineralisation have been found. Littleor no previous modern exploration has been done on this prospect. Arian Mexico is aware, through its preliminary exploration of this area, thatcalcareous and siliceous caliche covers the surface. This phenomenon caused byupward leaching, masks the underlying mineralisation from many conventionalexploration techniques. The Proposed Directors are of the opinion thatmineral-hosting structures may be present in this area which, if correct, may belocated using exploratory techniques, such as remote sensing and inducedpolarisation. The Proposed Directors intend to carry out further exploration inthe medium term. DONOVAN 2 The Donovan 2 concession, which is wholly owned by Arian Mexico, covers an areaof approximately 746 ha, located to the north of the Milagros epithermal veinsystem. Initial reconnaissance has been undertaken and field observationsindicate it has the potential to host volcanogenic massive sulphidemineralisation similar to the San Nicolas deposit nearby. NAVIDAD This concession, which is wholly owned by Arian Mexico, covers an area ofapproximately 100 ha near the village of Genaro Codina. To date no explorationhas been carried out save for initial reconnaissance. SOMBRERETE AREA In the Sombrerete Area, Arian Mexico has an option over 4 concessions over anaggregate area of approximately 250 ha and is in negotiations to acquire anoption over 3 further concessions over an aggregate area of approximately 1,650ha. All of the concessions are situated about 15 kilometres south of Jimenez delTeul in the westernmost part of the state of Zacatecas. Access is by pavedhighways through Chalchihuites and Jimenez del Teul, from which gravel roadsgive access to the concessions. REYNA VICTORIA Arian Mexico has an option over 4 concessions at the Reyna Victoria project.Under the option agreement, Arian Mexico is required to make staged paymentstotaling US$40,000 to the concession holder for the right to explore the areacovered by the concessions during the period of the option. Arian Mexico canexercise the option at any time until 25 April 2008 at an exercise price ofUS$250,000. The concession holder is also entitled to a 3 per cent. smelterroyalty. Initial reconnaissance, including survey and sampling, has been carriedout at the Reyna Victoria project. EL TRIANGULO Arian Mexico is in negotiations for an option to purchase the 3 concessions atthe El Triangulo project. The workings at the El Triangulo project appear tohave had limited production in the past from a stoped area in a variably alteredrhyolite body. There are a number of epithermal showings in the area and anumber of lenticular veins containing silver and gold. The Proposed Directorspropose to further investigate this area, subject to concluding negotiations toacquire an option over these concessions. TAILINGS PROJECTS During September to November 2005, Arian Mexico conducted preliminary scopingstudies on a number of silver tailings projects across Mexico, one of whichindicated an estimated tonnage of 2.3 million tonnes, with grades averagingapproximately 200 grams of silver per tonne of tailing. Arian Mexico iscurrently in negotiations to acquire at least one of these tailings projects. The Directors and the Proposed Directors are of the opinion that, subject to duediligence and the ability of the Enlarged Group to fund the capital costs ofacquisition and production, the near-term production potential of these tailingsprojects may provide a source of cash flow for the Enlarged Group, possiblywithin 18 months of development commencing. It is expected that if a tailingsproject is acquired, the Enlarged Group plans to utilise the concept of leachingsilver (and gold where present as a by-product) using relativelyenvironmentally-friendly thiosulphate in a series of reinforced concrete vats. SURFACE RIGHTS The Arian Group has no surface rights in respect of any of the concessions itholds or has options over. The Enlarged Group will seek to negotiate surfacerights at the relevant time, failing which the Enlarged Group will seek to relyon statutory rights to apply for expropriation or temporary occupation of landas stipulated under the Mining Law. DIRECTORS On Admission, the Board of the Company will comprise 3 executive and 3non-executive directors (the "Proposed Directors"): ANTHONY (TONY) JOSEPH WILLIAMS, CHAIRMAN AND DIRECTOR, AGE 55 Tony Williams, Chairman, is the founder and Chairman of the Dragon group, aprivately owned group of companies with interests in international miningfinance and project management. Prior to founding the Dragon group in 1995, hespent nine years in investment banking where he co-founded and led the NaturalResource Group at Yorkton Securities. He is a director or chairman of severalpublic (AIM, TSX) exploration and mining companies developing precious metal,base metal and diamond deposits worldwide. Earlier in his career he held seniorappointments in the mining industry and specialized in mineral valuation andacquisitions. He qualified as a mining geologist in 1972 from the Royal Schoolof Mines in London and is a member of several professional mining industryassociations. JAMES (JIM) THOMAS WILLIAMS, CHIEF EXECUTIVE OFFICER AND DIRECTOR, AGE 45 Jim Williams is an exploration and mining geologist with more than 20 years'experience worldwide in a variety of minerals. For the past three years he hasbeen evaluating silver (and gold) projects in Mexico and is very familiar withepithermal, skarn and VMS systems. He is a Fellow of the UK IMMM, a CharteredEngineer (CEng) and a Chartered Geologist (CGeol). He is also a EuropeanEngineer (Eur. Ing.) and a European Geologist (Euro. Geol). In addition, he isinvolved with project financing for the Arian Group and is conversant with theUS, Canadian and UK financial markets and is a director or has been a directorof a number of mineral and mining companies. He holds B.Sc., M.Sc. and D.I.C.(Diploma of Imperial College) degrees in geology and exploration. JAMES SEYMOUR CABLE, FINANCE DIRECTOR, AGE 53 James Cable is a Finance Director with extensive experience at board level inquoted and private companies. He has significant international and commercialexperience gained in the Middle East, Africa, the Far East and Europe in severalbusiness sectors including oil and construction. He has been a CharteredAccountant for 27 years. DAVID WILLIAM COHEN, DIRECTOR, AGE 43 David Cohen has over 20 years' experience in operations, project development andfinancing of the mining industry. Formerly with Anglo American Corporation andFluor Daniel Corp., he has worked in South Africa and internationally in themining and oil and gas sectors and has initiated and closed major resourceacquisitions and equity raisings. He is the President and CEO of Northern OrionResources Inc., a Toronto and AMEX listed intermediate copper and gold producerin South America and a director of Eastern Platinum Limited as well as a numberof resource companies. THOMAS (TOM) ANSTEY BAILEY, DIRECTOR, AGE 63 Tom Bailey qualified as a solicitor in 1975 and worked as an in-house lawyer fora number of years with Citibank and Chase Manhattan before returning to privatepractice, to establish a law firm. He was the senior partner of his firmspecializing in commercial law. He has for a number of years carried outconsultancy work for various companies and now acts as a consultant to theDragon group. JOHN MERFYN ROBERTS, DIRECTOR, AGE 56 Merfyn Roberts holds a B.Sc. Honours Geology from Liverpool University and aM.Sc. in Geochemistry from Oxford University. He started his career in 1976working as a geologist in the UK and in North America. He is also a CharteredAccountant (England and Wales) having qualified in 1980. He has gained extensiveexperience in finance, particularly with respect to the natural resource sector.This experience includes investment analysis, managing specialty investmentproducts, the establishment and management of an equity fund specialising innatural resources, and serving as the investment director for a securities firmand an investment fund. He is also a director of a number of TSX and AIM listedcompanies including Rambler Metals and Mining plc and Eastern Platinum Limited. EXTRAORDINARY GENERAL MEETING An Extraordinary General Meeting of the Company will be held at 8.00 a.m. PDT(4.00 p.m. BST) on 24 May 2006 at the offices of Anfield Sujir Kennedy & Durno,1600-609 Granville Street, Vancouver, BC, Canada V7Y 1C3 for the purposes ofconsidering and, if thought fit, passing the resolutions to approve theContinuation and the Merger which will be proposed as special resolutions. CONTINUATION OF THE COMPANY INTO THE B.V.I. In order to ensure that the Company emerges from the Merger as the survivingentity, the Company needs to continue its jurisdiction of incorporation fromBritish Columbia to the B.V.I. prior to approval of the Plan of Merger and entryinto the Articles of Merger. Continuation requires prior Shareholder approvalunder Canadian and B.V.I. law. CHANGE OF COMPANY NAME To reflect the proposed changes to the Company, its management and operationsfollowing the Merger, it is proposed that conditional on the Continuation, theCompany will change its name to Arian Silver Corporation. LOCK-IN ARRANGEMENTS As required by Rule 7 of the AIM Rules, each of the Proposed Directors and theirrelated parties and applicable employees (as defined in the AIM Rules) hasundertaken to the Company and Canaccord Adams Limited ("Canaccord") (for so longas it is the Company's broker) that, save in specified circumstances, they willnot dispose of any interest in Common Shares held by each of them for a periodof twelve months from Admission (''Lock-in Period''). The specifiedcircumstances are: (a) any disposal pursuant to acceptance of a general, partial or tender offermade by an offeror (the ''Offeror'') to all shareholders of the Company for thewhole or a part of the issued share capital of the Company (other than anyshares already held by the Offeror or persons acting in concert with theOfferor); or (b) the execution of an irrevocable commitment to accept a general, partial ortender offer made to all shareholders of the Company for the whole or a part ofthe issued capital of the Company (other than any shares already held by theOfferor or persons acting in concert with the Offeror); or (c) a sale to an offeror or potential offeror who has been named in anannouncement of a firm or possible intention to make an offer; or (d) any disposal required by an intervening court order; or (e) in the case of an individual, a disposal by his personal representatives. Furthermore, each of the Proposed Directors and their related parties andapplicable employees has also undertaken to the Company and to Canaccord (for solong as it is the Company's broker) not to dispose of their Common Shares forone year following the Lock-in Period otherwise than with the prior writtenconsent of Canaccord provided Canaccord remains broker to the Company (suchconsent not to be unreasonably withheld or delayed). THE MERGER The Directors and the Arian directors of Arian Silver have conditionally agreedto merge the Company and Arian Silver. On Admission, the Arian Shareholders willhold 48,899,200 Common Shares and the shareholders of the Company will own37,000,003 Common Shares. The holders of options over Common Shares will holdoptions over 650,000 Common Shares on Admission. The holders of options overshares in Arian Silver will hold options over 5,830,000 Common Shares and theholders of warrants to subscribe for shares in Arian Silver will hold warrantsover 2,899,600 Common Shares on Admission. MERGER STATISTICS Mid market closing price per Common Share on 15 March 2006 (being the dealingday before suspension of the Common Shares from trading on AIM) 19.5p Number of Common Shares currently in issue and in issue following Continuation37,000,003 Number of Common Shares being issued under the Merger 48,899,200 Number of Common Shares in issue immediately following Admission 86,315,869 Number of Common Shares in issue immediately following Admission assuming fullexercise of all outstanding options and warrants over Common Shares 95,903,802 Number of Common Shares held by the Arian Shareholders, Arian Optionholders andArian Warrantholders following Admission (assuming full exercise of alloutstanding options and warrants over Common Shares) 57,628,800 EXPECTED TIMETABLE OF PRINCIPLE EVENTS Latest time and date for receipt of Forms of Direction 8.00 a.m. PDT (4.00 p.m.BST) on 18 May 2006 Latest time and date for receipt of Forms of Proxy for the Extraordinary GeneralMeeting 8.00 a.m. PDT (4.00 p.m. BST) on 22 May 2006 Extraordinary General Meeting 8.00 a.m. PDT (4.00 p.m. BST) on 24 May 2006 Completion Date of the Merger 24 May 2006 Trading on the existing ISIN CA4116341088 expected to cease 24 May 2006 Admission and dealings expected to commence in the Common Shares on AIM 8.00a.m. BST 25 May 2006 (12 midnight PDT on 25 May 2006) Trading on the new ISIN VGG0472G1063 expected to commence and CREST accounts tobe credited 25 May 2006 Dispatch of definitive share certificates in respect of the Common Shares heldin certificated form by 1 June 2006 AIM ADMISSION The Common Shares are currently admitted to trading on AIM. It is expected thatthe current admission to AIM will be cancelled with effect from 8.00 a.m. on 24May 2006 (which is the date on which completion of the proposed merger isexpected to occur). Application will be made to the London Stock Exchange forthe existing Common Shares to be re-admitted to trading on AIM and for the NewCommon Shares to be admitted to trading on AIM. It is expected that Admissionwill become effective and dealings will commence in the Common Shares at 8.00a.m. BST on 25 May 2006. The Company's ISIN will change from CA4116341088 toVGG0472G1063. Canaccord is Nominated Adviser and Broker to Hard Assets and will act asNominated Adviser and Broker to the enlarged group. Copies of the circular willbe available from the offices of Canaccord, First Floor Brook House, 27 UpperBrook Street, London W1K 7QF. This information is provided by RNS The company news service from the London Stock Exchange