Xtierra Inc. - $1.25M USD convertible note financing



    - Feasibility Study on Bilbao Project starts

    TORONTO, April 14 /CNW/ - Xtierra Inc. (TSXV - XAG) ("Xtierra" or the
"Company"), Xtierra and the Pacific Road Resources Funds ("PRRF") are pleased
to announce that they have reached agreement, subject to regulatory and other
approvals, for the sale to PRRF of a USD$1.25 million convertible note
financing arranged through Xtierra's wholly-owned subsidiary, Orca Minerals
Limited.
    Xtierra is also pleased to announce that it has initiated the first phase
of an independent Feasibility Study on its wholly-owned Bilbao
Silver-Zinc-Lead-Copper Project in Zacatecas, Mexico. Proceeds from this
financing will be used to fund this next phase of the Feasibility Study.

    
    Financing
    ---------
    

    PRRF will subscribe for an aggregate principal amount of USD$1.25 million
in non-interest bearing notes (the "Notes") issued by Orca Minerals Limited
("Orca Minerals"), an Ontario corporation wholly-owned by the Company. The
Notes have a term of five years and are convertible, at the holders' option,
into a number of common shares of Orca Minerals which will equal ten percent
(10%) of the issued shares of Orca Minerals. PRRF has a further right to
exchange their holdings in Orca Minerals into either: (i) a number of shares
of Bilbao Resources, S.A. de C.V. ("Bilbao Resources"), an indirectly-owned
Mexican subsidiary of Orca Minerals which holds the Company's interest in the
Bilbao project, which will equal ten percent (10%) of the issued shares of
Bilbao Resources or (ii) a number of common shares of Xtierra equal to the
value of PRRF's equity interest in Orca Minerals at the time of exchange
divided by the volume-weighted average trading price of Xtierra's shares
during a 30-day period prior to such exchange. If exchanged into shares of
Bilbao Resources, the Bilbao Resources shares are further exchangeable into a
number of common shares of Xtierra equal to the value of PRRF's equity
interest in Bilbao Resources at the time of exchange divided by the
volume-weighted average trading price of Xtierra's shares during a 30-day
period prior to such exchange. PRRF also has a put right, exercisable at its
option at any time prior to maturity to require Xtierra to purchase the Notes
for a number of common shares equal to the principal amount of the Notes
divided by the volume weighted average trading price of Xtierra's common
shares during the 30 day period prior to the exercise of such right. The Notes
provide for a minimum conversion price of $0.10 per Xtierra common share.
    PRRF purchased the securities for investment purposes and may or may not
purchase or sell securities of Xtierra or its subsidiaries in the future on
the open market or in private transactions, depending on market conditions and
other factors material to PRRF's investment decisions.

    
    Related Party Transaction
    -------------------------
    

    PRRF is a related party to Xtierra and accordingly, this financing is
subject to the rules contained in Multilateral Instrument 61-101 of the
Canadian Securities Administrators ("MI 61-101") and Policy 5.9 of the TSX
Venture Exchange. PRRF currently holds 11,240,000 common shares (or
approximately 22.5% of the issued shares of Xtierra) and warrants to purchase
a further 5,620,000 common share for $0.75 per share until September 3, 2009
and thereafter for $1.00 per share until September 3, 2010.
    As the number of shares of Xtierra issuable to PRRF is contingent, in
part, upon future values and share prices, the number of such shares which
PRRF may acquire should it exercise its exchange rights, cannot be determined
at this time. However, in respect of the Notes, due to the minimum exchange
price noted above, PRRF will not likely acquire more than 15,537,500
additional shares (based on a conversion rate of $1.243 for USD$1.00, being
the Bank of Canada's noon-day rate on April 6, 2009) increasing its potential
holdings in Xtierra to 26,777,500 shares or approximately 40.9% of the issued
and outstanding shares. Minco plc ("Minco") of London, England currently holds
30,000,003 shares of Xtierra amounting to 60.2% of the common shares of
Xtierra. If PRRF were to increase its holdings to 26,777,500 as noted above,
Minco's holdings would be reduced to approximately 45.9%. Minco concurs with
and supports the issue of the Notes to PRRF.
    The issue of the Notes to PRRF was considered and approved by the Board
of Directors of Xtierra, two of the five members of which are neither officers
nor employees of Xtierra. Mr. Lee Graber, a director of Xtierra and an
Investment Director with Pacific Road Capital Management Pty. Limited, which
acts as investment manager or advisor to PRRF declared an interest in the
transaction and neither voted on nor participated in the Board's deliberations
concerning the issue of the Notes.
    Xtierra does not intend to complete a formal valuation in accordance with
section 5.4 of MI 61-101 based upon Xtierra being a TSX-V listed company and
the support of the transaction by Minco plc. Xtierra consequently relies on
the exemptions contained in subsections 5.5(b) and (c) of MI 61-101. Minority
shareholder approval of the issue of the Notes will not be sought based upon
the exemption contained in subsection 5.7(c) which is applicable in these
circumstances.

    
    Feasibility Study
    -----------------
    

    The first phase of the Feasibility Study will comprise metallurgical
testwork and process optimization of the oxide, mixed oxide/sulphide and
sulphide ores. Environmental baseline studies, hydrological studies,
geotechnical analyses (rock mechanics) for both open pit and underground
design purposes and mine design for both open pit and underground extraction
methods will also be completed. The second phase of the Feasibility Study, to
be completed by the end of the first quarter 2010, would include all the
required drilling, any pilot plant testwork if deemed required, all permits
and engineering design.

    
    Comment by CEO
    --------------

    Commenting on the financing, Xtierra's President & CEO, Terence McKillen,
said, "We are very pleased that the Pacific Road Resources Funds share our
optimism for the Bilbao project and have agreed to provide additional
financing to support the proposed Feasibility Study at a time when capital and
equity markets are not particularly receptive to junior resource developers.
We anticipate completion of the first phase of the feasibility study in the
Fourth Quarter of 2009."

    About Xtierra Inc.
    ------------------
    

    Xtierra Inc. is a Toronto based exploration and development company
listed on the TSX Venture Exchange. Xtierra's shares trade under the symbol
"XAG". Xtierra has 49,862,003 shares issued and outstanding.
    Xtierra's objective is to become a mid-tier producer of silver and base
metals through the development of its Bilbao and Laguna projects, both located
in the Central Mexican Silver Belt in the State of Zacatecas, as well as
through organic growth and M & A opportunities.

    
    About Pacific Road Resources Funds
    ----------------------------------
    

    PRRF is a private equity fund investing in the global mining industry.
PRRF provides expansion and buyout capital for mining projects, mining-related
infrastructure and mining services businesses located throughout resource-rich
regions of the world. PRRF is managed or advised by Pacific Road Capital
Management Pty. Limited ("PRCM"). The PRCM team, located in Sydney, Australia
and San Francisco, USA, is comprised of experienced investment and mining
professionals. For further information about PRRF and PRCM, please go to their
website at www.pacroad.com.au.

    
    ON BEHALF OF THE BOARD OF DIRECTORS OF XTIERRA INC.

    Terence N. McKillen
    President and CEO

    Cautionary Notes:
    -----------------
    

    This press release may contain "forward-looking information" within the
meaning of applicable Canadian securities legislation. The TSX Venture
Exchange has not reviewed and does not accept responsibility for the adequacy
or accuracy of the content of this release.





For further information:

For further information: visit www.xtierra.ca or contact: Terence
McKillen, President & Chief Executive, (416) 362-8243; Tim Gallagher,
Director, (416) 925-0090; Alejandro Alaniz, Director Finance & Administration
(Mexico), +52 (492) 925-0804

Organization Profile

XTIERRA INC.

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