TALON METALS ACQUIRES POTASH EXPLORATION PROJECTS IN BRAZIL
May 25, 2009
Exploration Licences Granted for Juruena Gold Project in Brazil
Road Town, Tortola, British Virgin Islands (May 25, 2009) – Talon Metals Corp., (“Talon” or the “Company”) (TSX: TLO) today announces that it has concluded an agreement with Kmine Holdings Ltd. (“Kmine”), a private company, to acquire a 100% interest in Bancor Mineracao Ltda. (“Bancor”), a Brazilian subsidiary of Kmine. Bancor has eight potash project areas in the Sergipe and Alagoas States of Brazil comprising a total of 36,402 hectares (89,951 acres) for which it holds exploration licenses for potash or has applied for exploration licenses.
Separately, Talon was recently awarded the exploration rights to the Juruena Gold Project in Mato Grosso State, Brazil from the Departamento Nacional de Produção Mineral (“DNPM”).
“The acquisition of the potash exploration licences from Kmine conforms to our strategy to acquire interests in holdings that have the potential to become substantial projects,” said Mr. Stuart Comline, President and CEO of Talon. “It also underlines our belief that, under the current uncertain circumstances and a depressed commodity market, it is important to acquire strategic holdings in commodities that may have a more settled future. We will continue to review other potash opportunities, as well as gold opportunities that have the potential to host substantial deposits.”
The Bancor Potash Projects and the Kmine Agreement
Bancor holds the exploration rights on 17,473 hectares (43,176 acres) in three project areas and has applied for the exploration rights on an additional 18,929 hectares (46,774 acres) in five further project areas. All of these potash projects are in the Sergipe and Alagoas states of Brazil. The project areas are in the same sedimentary basin as established oil producing areas and the nearby Taquari-Vassouras potash mine, which is operated by Vale and produced 607,000 tonnes of potash in 2008.
A considerable amount of exploration data exists for the area, mainly from the oil industry including one well in Bancor’s Sergi project area which intersected a cumulative 25 metres of potash mineralization in three sedimentary units. Other wells in, or close to, the Bancor project areas have also intersected potash mineralization. The existing exploration data will be reviewed as part of Talon’s exploration program, which will commence immediately.
Under the terms of the agreement with Kmine, Talon has acquired a 100% interest in Bancor, for cash payments of US$20 million, payable over 10 years, of which US$375,000 was payable on closing of the agreement and again at the commencement of the second year. Thereafter, further incremental payments are made annually on the third, fourth and fifth anniversaries of the closing date of the agreement and the final payment is payable on the tenth anniversary of the closing date. The agreement allows for Talon to make payments from the end of the second year, part in Talon shares (50% of each payment) and part in cash. The amount payable in Talon shares is equivalent to 47% of the full purchase consideration. Furthermore, Talon may withdraw from the agreement at any time and return the Bancor shares to Kmine.
Potash is a major component of fertilizers and Brazil is a large consumer of this commodity in its extensive agricultural industry. Brazil imports most of its potash as currently only about 10% of its consumption is produced domestically. Furthermore, world potash demand has increased 35% on a cumulative basis between 2000 and 2007 and industry projections are for further increases in demand. However potash deposits are not readily found in many regions of the world. In fact 84% of world potash production is currently supplied by only five countries.
The Juruena Gold Project
On April 30, 2009 the DNPM in Brazil granted Talon a 6,369 hectare (15,739 acre) exploration license for the Juruena Gold Project (“Juruena”) in the Alta Floresta gold district in the Mato Grosso State, some two years after the Company submitted a tender for the exploration rights. Juruena, which previously had been one of the major garimpeiro mining sites in Brazil, has an estimated historical production of some 250,000 ounces of gold, mainly from shallow alluvial and saprolite deposits from eleven pits. The hard rock target here is a series of multiple quartz veins hosted in alteration zones within granites. The Company is undertaking a more detailed assessment of previous mining and exploration at Juruena to formulate a strategy to maximize the value for Talon.
Update on the Saber Coal Bed Methane (“CBM”) project
Further to the Company’s press release of April 24, 2009, Talon is continuing with its due diligence review on the Saber CBM projects in Botswana. The initial agreement entered into between Saber and Tlou Energy Pty Ltd. (“Tlou”) on April 24, 2009 will add considerable management capability and experience to the Saber projects, subject to the successful negotiation and execution of definitive agreements with Tlou. It is anticipated that this will enhance the exploration program and will result in an improved assessment of the exploration results and potential of the projects in the coming months. Accordingly, this will provide the necessary confidence for Talon management to determine whether to proceed with the proposed merger with Saber.
Talon is a TSX-listed company focused on the acquisition, exploration and advancement of high quality resource projects. The Company has a well-qualified exploration and management team with extensive experience in exploration and project management.
Talon has a treasury of approximately CDN$6.5 million and holds 2,450,000 common shares in Beadell Resources Limited (ASX:BDR). Talon has 27,054,222 common shares outstanding.
For additional information on Talon please visit the Company’s website at www.talonmetals.com or contact:
VP Investor Relations
Tau Capital Corp.
Tel: (416) 361-9636 x 243
This press release contains certain “forward-looking statements”. All statements, other than statements of historical fact, that address activities, events or developments that Talon believes, expects or anticipates will or may occur in the future are forward-looking statements, including, without limitation, statements regarding Talon’s plans and objectives, the potential merger of Talon and Saber (the “Merger”), the continuation of Talon’s due diligence review of Saber, and the entry by Saber and Tlou into definitive agreements. These forward-looking statements reflect the current expectations or beliefs of Talon based on information currently available to Talon. Forward-looking statements are subject to a number of risks and uncertainties that may cause the actual results of Talon to differ materially from those discussed in the forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on Talon. Material factors that could cause actual results or events to differ materially from current expectations include, among other things: the failure of the Tlou exploration program to yield positive results; the failure of Tlou and Saber to successfully negotiate and enter into definitive agreements; the failure of Talon and Saber (together, the “Companies”) to reach agreement and to execute a pre-Merger agreement; and subsequently, the failure of the Companies to complete the Merger; changes in government regulations and policies; and other exploration, development and operating risks.
Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable laws, Talon disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Although Talon believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein. Information pertaining to Saber has been furnished by Saber. Although Talon does not have any knowledge that would indicate that any such information is untrue or incomplete, Talon assumes no responsibility for the accuracy or completeness of such information.