Talon Metals Announces Merger Agreement With Saber Energy



    
    /NOT FOR DISTRIBUTION TO UNITED STATES WIRE SERVICES OR FOR DISSEMINATION
    IN THE UNITED STATES/

    Talon Amends Interim Loan to Saber

    TSX:TLO
    

    ROAD TOWN, Tortola, British Virgin Islands, Sept. 1 /CNW/ - Talon Metals
Corp., ("Talon") (TSX: TLO) is pleased to announce that it has entered into a
definitive, binding pre-merger agreement (the "Merger Agreement") with Saber
Energy Corp. ("Saber") in respect of the proposed business combination (the
"Merger") of Talon and Saber (each, a "Company" and, together, the
"Companies"), as contemplated in the previously announced heads of agreement
("HOA") between the Companies dated September 25, 2008. The Merger remains
subject to the approval of the Toronto Stock Exchange (the "TSX") and the
shareholders of Talon and Saber.
    In addition, Talon has agreed to further amend the CDN$6 million loan to
Saber (the "Interim Loan"), as previously announced on September 25, 2008,
March 24, 2009 and April 24, 2009, such that Talon will loan a further US$0.5
million to Saber upon the satisfaction of certain conditions. The maturity
date of the Interim Loan has also been amended to be the earlier of December
15, 2009 and the effective date of the Merger.
    Talon has completed a due diligence review on Saber, with the assistance
of an experienced coal bed methane ("CBM") industry consultant. The completion
of the due diligence review was delayed until Saber had compiled and
interpreted all of its exploration results, and more specifically, concluded
its farm-in agreement with Tlou Energy Pty Ltd ("Tlou").
    "The merger with Saber will allow Talon to participate in a large,
rapidly developing coal bed methane project where significant exploration
progress has been made to date," said Mr. Stuart Comline, President and CEO of
Talon. "Talon will further benefit in that the next phase of exploration is
fully funded, thus reducing the forward risk to Talon on a large exploration
venture in one of the most stable countries in Africa. In addition, Talon
shareholders stand to gain from Saber's plans to further explore the priority
targets that have been identified and to develop its gas project with its
joint venture partner, Tlou. With Tlou's experienced management team and the
large land holdings over the coal seams in Botswana, Saber is a key strategic
player in developing the coal bed methane and shale gas industry in southern
Africa, a region facing significant energy shortages."
    Tlou is using the compilation and interpretation of Saber's exploration
results from its more than 80 wells to effectively deploy its proprietary,
Integrated Exploration Solution on the Karoo Central license area where three
coal seams within a 40-50 metre potential pay zone have been identified.
Furthermore, the Karoo North and Karoo West licence areas, where very little
data is available, will be explored.
    Tlou is a 50-50 joint venture between Mitchell Energy Group ("Mitchell")
and Walcot Capital ("Walcot") both based in Australia. Tlou was founded
exclusively to focus on developing CBM production in southern Africa and the
Saber project is its first undertaking.
    Over the past decade, the Australian CBM industry has developed into a
rapidly growing industry in which large scale CBM reserves have been
delineated. This growth has attracted substantial investment to the sector in
Australia. The executives behind Mitchell and Walcot have been a significant
part of this growth in Australia. Mitchell's experienced team, which has
drilled a significant number of the CBM wells in Australia, brings to the
Saber project a proven drilling methodology intended to minimize project risk,
while proving this large scale CBM opportunity.
    Under Tlou's management, exploration at the Saber project is expected to
resume in the near future, including drilling on the priority rated projects,
mainly in the Karoo Central and Karoo North licence areas. As Tlou will fund
100% of this new exploration program (estimated at US$8 million), Talon's
treasury will not be impacted for the forthcoming phase of exploration, while
Talon has the opportunity to benefit from the project's potential future
commercial development.

    Value Warrants

    As previously announced, upon the first closing in connection with the
Saber Placement, (as defined below) which is anticipated to occur prior to
closing of the Merger, Talon will receive 6,000,000 common share purchase
warrants of Saber (each, a "Value Warrant"). Each Value Warrant will entitle
the holder thereof to purchase one common share of Saber at an exercise price
equal to the gross subscription price paid in respect of each common share of
Saber sold pursuant to the Saber Placement.

    The Merger

    Under the terms of the Merger Agreement, Talon and Saber have agreed,
inter alia, that, upon the Merger, the securities of each of the Companies
will be exchanged for securities of the company resulting from the Merger
("MergeCo") on the following basis:

    
    (a) each outstanding common share of Talon will be exchanged for one (1)
        common share of MergeCo (each, a "MergeCo Share");

    (b) each option outstanding under the stock option plan of Talon to
        purchase common shares of Talon (a "Talon Option") will be exchanged
        for an option to acquire an equal number of MergeCo Shares at an
        exercise price per MergeCo Share equal to the exercise price of the
        Talon Option so exchanged;

    (c) each outstanding purchase Value Warrant issued by Saber to Talon will
        be cancelled;

    (d) each outstanding common share of Saber (each, a "Saber Share") will
        be exchanged for 0.17685 MergeCo Shares; and

    (e) each outstanding common share purchase warrant of Saber (a "Saber
        Warrant") will be exchanged for 0.17685 MergeCo warrants. Each whole
        MergeCo warrant will entitle the holder to purchase one (1) MergeCo
        Share at an exercise price of US $0.90.
    

    Talon has received an opinion from its financial advisor, Thomas Weisel
Partners Canada Inc., to the effect that, as of the date of such opinion, and
subject to the assumptions, qualifications and limitations set forth in the
opinion, that the consideration payable pursuant to the Merger is fair, from a
financial point of view, to Talon.
    Certain conditions must be satisfied on or before November 30, 2009 or
such other date as the Companies may agree (the "Completion Deadline") in
order to complete the Merger including:

    
    (a) certain regulatory and government approvals;

    (b) approval of the Merger by the shareholders of each of Talon and
        Saber;

    (c) no material adverse change shall have occurred on a consolidated
        basis in respect of Saber or Talon;

    (d) Saber raising proceeds of at least CDN$2.2 million through the
        issuance of Saber Shares (the "Saber Placement"); and

    (e) execution of voting support agreements pursuant to which, among other
        things, the holders of a majority of the outstanding Saber Shares
        agree to vote in favour of the Merger.

    Among other circumstances, the Merger Agreement may be terminated:

    (a) by mutual consent of the Companies;

    (b) by a Company if:

        (i)   certain conditions precedent for its benefit are not satisfied
              in accordance with the terms of the Merger Agreement;

        (ii)  the Merger is not completed by the Completion Deadline,
              provided that there is no intentional breach of the covenants
              of such terminating Company;

        (iii) at either of the shareholders' meetings of the Companies held
              to approve the Merger, shareholder approval is not obtained;

        (iv)  the board of directors of the other Company fails to recommend
              to the shareholders of such other Company that they vote in
              favour of the Merger, except as expressly permitted in limited
              circumstances under the Merger Agreement;

        (v)   the board of directors of the other Company withdraws, amends,
              modifies, qualifies, or publicly proposes to or publicly states
              that it intends to withdraw, amend, modify or qualify, its
              recommendation to the shareholders of such other Company that
              they vote in favour or the Merger;

        (vi)  the other Company fails to hold a shareholders' meeting on or
              before November 10, 2009 to approve the Merger, subject, in the
              case of Talon to adjournment of up to 10 business days in
              certain circumstances; and

        (vii) there is an intentional breach of the covenants of the other
              Company or any of such other Company's subsidiaries or
              affiliates, as applicable;

    (c) by Saber if:

        (i)   the board of directors of Talon approves or recommends a Talon
              Superior Proposal (as defined in the Merger Agreement);

        (ii)  Talon enters into a definitive agreement with respect to a
              Talon Superior Proposal; and

    (d) by Talon if:

        (i)   in the event that due diligence investigations performed by
              Talon and/or its representatives reveal any information or fact
              which, in the sole opinion of Talon, has or would have a
              Material Adverse Effect on Saber (as defined in the Merger
              Agreement).
    

    In the event that the Merger Agreement is terminated by Saber in the
circumstances described in items (b)(iv) to (vii) or (c) above, or by either
Saber or Talon if the meeting of the shareholders of Talon to approve the
Merger is held and Talon's shareholders do not approve the Merger, Talon is
required under the Merger Agreement to pay to Saber the reasonable third party
fees and expenses incurred by Saber in connection with the transactions
contemplated by the Merger Agreement and the agreements relating to the
Interim Loan, including the negotiation thereof. Similarly, if the Merger
Agreement is terminated by Talon in the circumstances described in items
(b)(iv) to (vii) above, or by either Talon or Saber if the meeting of the
shareholders of Saber to approve the Merger is held and Saber's shareholders
do not approve the Merger, Saber is required under the Merger Agreement to pay
to Talon a termination payment of US$600,000 plus all reasonable third party
fees and expenses of Talon incurred in connection with the negotiation and
execution of the Merger Agreement and the transactions contemplated thereby.
    A copy of the Merger Agreement has been filed on Talon's SEDAR profile at
www.sedar.com.
    In light of the fact that when the Companies entered into the HOA on
September 25, 2008, some of the directors of each Company beneficially owned
or exercised control or direction over common shares of the other Company,
including Warren Newfield (who is a director of both Companies), an
independent committee of the board of directors of Talon comprised of Sandra
Cowan, Stuart Comline and Luis Mauricio de Azevedo, was formed to review each
of the Interim Loan, the HOA and the Merger Agreement. Talon's independent
committee and board of directors have approved each of the Interim Loan and
the HOA (and respective amendments thereto) and the Merger Agreement.

    Interim Loan

    As described above, and as previously announced, Talon has loaned an
aggregate principal amount of CDN$6 million to Saber under the Interim Loan.
Pursuant to an amending agreement between the Companies dated as of the date
hereof, Talon has agreed to lend a further US$0.5 million to Saber upon the
satisfaction of certain conditions.
    The Interim Loan bore interest at 12% per annum from September 23, 2008
to January 24, 2009 and at 18% per annum from January 25, 2009 to July 31,
2009. From August 1, 2009 to the date of maturity of the Interim Loan (being
the earlier of December 15, 2009 and the effective date of the Merger), the
Interim Loan bears interest at 25% per annum.

    Update on the Saber Coal-Bed Methane ("CBM") Project

    Botswana is one of the most attractive jurisdictions in Africa for
resource exploration and development and has a well established and
administered resource industry.
    In addition to drilling over 80 holes, Saber has compiled a series of
composite logs and captured the results of its desorption, adsorption, gas
analysis and other tests, including proximate analysis in a relational
database for identifying areas for further exploration and possible
development. Tlou analyzed these results as part of its extensive technical
due diligence and to determine how best to implement its Integrated
Exploration Solution ("IES"). After consultation with Tlou, Saber decided to
shut-in its remaining production 5-spots, pending the results of the IES and
determination of the appropriate drilling and completion techniques.
    Botswana and other countries in southern Africa are facing significant
shortages of electricity over the next decade. CBM is an important fuel source
for gas-fired power stations. SNC Lavalin, under contract from Saber, has
already completed a technical study for a 1,000 MW combined cycle gas fired
power station.
    To advance the development of the Saber CBM project, Saber and certain of
its subsidiaries and affiliates entered into a share sale agreement (the
"Share Sale Agreement") with Tlou and related shareholders' deeds and
management agreements (together, the "Tlou Transaction Documents") pursuant to
which Tlou acquired (the "Tlou Transaction") an indirect:

    
    (a) 64% interest in seven prospecting licences comprising Saber's
        "Masama" licence area, also known as "Karoo North";

    (b) 10% interest in five prospecting licences comprising Saber's
        "Kalahari" licence area also known as "Karoo Central"; and

    (c) 75% interest in six prospecting licences comprising Saber's "Karoo
        West" licence area.
    

    Tlou has the right to purchase an additional 25% shareholding interest in
the Karoo Central licence area according to a pre-determined formula. In the
event that Tlou does not complete the work programs on the Saber project
within the timeframe contemplated in the Tlou Transaction Documents, all of
the shares of Saber's subsidiaries and affiliates acquired by Tlou thereunder
will be transferred back to Saber and/or its subsidiaries and affiliates,
subject to limited exceptions.
    Saber has outstanding 152,980,690 common shares and 2,530,534 Saber
Warrants.
    For additional information on Saber and Tlou please refer to Talon's news
releases dated April 24, 2009 and May 25, 2009.
    This news release does not constitute an offer to sell or a solicitation
of an offer to buy any of the securities in the United States or in any state
in which such offer, solicitation or sale would be unlawful. The securities
have not been and will not be registered under the United States Securities
Act of 1933, as amended (the "U.S. Securities Act") or any state securities
laws and may not be offered or sold within the United States or to a U.S.
person (as defined in Regulation S under the U.S. Securities Act) unless
registered under the U.S. Securities Act and applicable state securities laws
or an exemption from such registration is available.
    The Saber Shares have not been approved or disapproved by the United
States Securities and Exchange Commission or by any state securities
commission or regulatory authority, or any Canadian provincial securities
commission or other regulatory authority, nor have any of the foregoing
authorities passed on the accuracy or adequacy of the information contained
herein. Any representation to the contrary is a criminal offense.

    About Talon

    Talon is a TSX-listed company focused on the acquisition, exploration and
development of high quality resource projects. Talon has a well-qualified
exploration and management team with extensive experience in exploration and
project management.
    Talon has gold exploration projects and is a developing a portfolio of
potash projects in Brazil. Talon aims to acquire interests in, and develop,
large resource projects, where it can add value to those projects, while
reducing risk, through diversification of the commodity type held and the
stage of development of each project.
    Talon has a treasury of approximately CDN$5 million and holds 2,450,000
common shares in Beadell Resources Limited (ASX:BDR). Talon has 27,054,222
common shares outstanding and 30,239,222 shares fully diluted.

    Forward-Looking Statements

    This news 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 Merger, the
Interim Loan, Saber and its CBM project and the Tlou Transaction. 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.
    Factors that could cause actual results or events to differ materially
from current expectations include, among other things: the failure of the
Companies to complete the Merger; Saber failing to repay the Interim Loan in
the event that the Merger is not completed; volatility of and sensitivity to
market prices for gas and prices (market or otherwise) for electricity;
changes in the anticipated demand for electricity in southern Africa; changes
in equity and debt markets; inflation; changes in exchange rates; failure of
Tlou's investment to advance the development of Saber's CBM project;
uncertainties relating to the availability and costs of financing needed to
complete exploration activities, demonstrate the feasibility of the gas
reserve and to develop Saber's proposed gas-fired megawatt power plant (the
"Power Project"); the ability of Saber, Tlou and/or MergeCo, as applicable, to
conclude power purchase agreements with the intended offtakers of the Power
Project; exploration costs varying significantly from estimates; delays in the
exploration and development of, and/or commercial production from, the Power
Project and the properties Saber has an interest in; inability to commercially
exploit the resources which may be contained in Saber's CBM Project, including
the production of downstream products such as petrochemicals; inability to
secure and produce sufficient water to support gas production; actual gas
usage varying from assumptions; inability to, or delays in, procuring the
engineering, procurement and construction contract, labour, capital equipment
and/or operating parts and supplies required for the Power Project on
favourable terms or at all; equipment failure; unexpected geological or
hydrological conditions; political risks arising from operating in Africa;
imprecision in preliminary resource estimates, including estimates of the life
and recovery thereof; success of future exploration and development
initiatives; inability to establish the minimum amount and quality of reserves
required to support the proposed Power Project; competition; operating
performance of facilities; environmental and safety risks, including increased
regulatory burdens, seismic activity, weather and other natural phenomena;
inability to, or delays in, obtaining necessary permits and approvals from
government authorities, including approval of environmental impact assessment
applications; the existence of undetected or unregistered interests or claims,
whether in contract or in tort, over the property of Saber and/or MergeCo,
respectively; changes in government regulations and policies, including tax
and trade laws and policies; risks relating to labour; other exploration,
development and operating risks; or other factors, including the additional
factors described under the heading "Forward-Looking Statements" in Talon's
news releases dated September 25, 2008 and April 24, 2009, which are available
on Talon's website at www.talonmetals.com and under its SEDAR profile at
www.sedar.com.
    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 and Tlou 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.





For further information:

For further information: on Talon please visit the Talon's website at
www.talonmetals.com or contact: Erica Belling, VP Investor Relations, Tau
Capital Corp., Tel: (416) 361-9636 x 243, Email: ebelling@taucapital.com

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