Lakota Resources Announces Proposal Filing Pursuant to the Bankruptcy and Insolvency Act and Appointment of a Trustee



    LAK: TSX-V

    TORONTO, Aug. 4 /CNW/ - Lakota Resources Inc. (LAK: TSX-V, the
"Corporation" or "Lakota") The Board of Directors of the Corporation (the
"Board") announced today that, after an eight month review of the
Corporation's business activities, it has concluded that a restructuring of
the Corporation's debts and concurrent refinancing is now necessary in order
to continue as a going concern. Therefore, as a first step, the Corporation
will make a proposal to its creditors (the "Proposal") under the Bankruptcy
and Insolvency Act (Canada), effective on today's date. The Proposal,
generally, contemplates the complete satisfaction of the Corporation's debts,
including an immediate, compromised payment in satisfaction of all debts to
unsecured creditors.
    The Board has decided to make the Proposal after receipt of an offer from
a third party investor (the "Purchaser") whereby the Purchaser wishes to
purchase all of the issued and outstanding shares of Lakota Resources (T) Ltd.
("Lakota (T)"). Lakota (T) is a wholly owned subsidiary of the Corporation
through which the Corporation holds a beneficial interest in certain mining
claims in Tanzania. In consideration of the purchase of the Lakota (T) shares,
the Purchaser has offered to deal with the liabilities of the Tanzanian
subsidiaries of the Corporation amounting to approximately $1,075,000 and to
make a cash payment of up to $172,990. The cash payment is composed of $80,000
plus the outstanding amount owing, if any, under a secured loan to the
Corporation made by the Purchaser (the "Loan"). The purpose of the Loan is to
enable the Corporation to pay retainers on account of administrative fees and
expenses in connection with the filing of the Proposal and related
transactions, to fund costs and to permit the Corporation to make certain
loans to Lakota (T) to allow it to satisfy certain obligations related to its
Tanzanian operations. To date, $121,654 has been advanced under the Loan prior
to the filing of the Proposal, with $28,664 of that amount being advanced to
Lakota (T).
    The offer by the Purchaser is conditional upon the approval of the
Proposal, and certain other conditions customary in a transaction of this
nature. For the Proposal to be "approved", it must first be put to a vote at a
meeting of the creditors; and, each class of unsecured creditors must vote for
the acceptance of the Proposal by a majority in number and two thirds in value
of the creditors of each class present, personally or by proxy, at the meeting
and voting on the resolution. Thereafter, the Proposal must also be approved
by the Court. If approved, the Corporation will use the proceeds of the sale
of its shares in Lakota (T) to satisfy the claims of its creditors in
accordance with the terms of the Proposal.
    The Corporation is a natural resource exploration company principally
engaged in the acquisition, exploration and development of gold resource
properties in the Lake Victoria Gold Belts of Tanzania, East Africa. Over the
past eight months, management and the Board have explored many options in the
search for funding to cover the Corporation's indebtedness and to raise money
to bring its Tembo Project to a NI 43-101 resource level. The Corporation has
sought joint venture partners, equity investors, merger candidates, as well as
engaging a securities firm to seek institutional and retail investors. These
efforts have not been successful. The state of the financial markets has
prevented Lakota from raising equity financing and has limited Lakota's
options.
    The Proposal was designed by the Corporation to be fair and equitable to
all creditors and stakeholders, with the goal of providing the best chance at
realizing value for the creditors, claimants and shareholders under the
circumstances. The Proposal will address all classes of creditors and observe
standard practice, regulatory and financial requirements.
    For the filing of the Proposal, the Corporation has contracted A. Farber
& Partners Inc., part of the Farber Financial Group, to act as Trustee. The
Trustee shall call a creditors meeting, to be held within 21 days after the
date of the filing the Proposal, to consider and vote on the Proposal. In
advance of the creditors meeting, and in connection with the vote on the
Proposal, the Trustee will provide to the creditors such notices, documents
and information as required by the Bankruptcy and Insolvency Act (Canada). If
the Proposal is refused by the creditors or the Court, the Corporation will
automatically become bankrupt.

    
    Neither TSX Venture Exchange nor its Regulation Services Provider (as
    that term is defined in the policies of the TSX Venture Exchange) accepts
    responsibility for the adequacy or accuracy of this release.
    





For further information:

For further information: LAKOTA RESOURCES INC., Suite 500, 2 Toronto
Street, Toronto, Ontario, M5C 2B6, Tel: (416) 594-0791 x128, Fax: (416)
594-9690

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LAKOTA RESOURCES INC.

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