International Minerals to Acquire Metallic Ventures

SCOTTSDALE, Ariz. & TORONTO--(BUSINESS WIRE)--International Minerals Corporation (TSX: IMZ) (SIX: IMZ) (“IMZ,” “International Minerals”) and Metallic Ventures Gold Inc. (TSX: MVG) (“Metallic”) jointly announce that the proposal from International Minerals, which was announced on October 29, 2009, has been accepted by Metallic and that the parties have entered into an arrangement agreement (the “Arrangement Agreement”) whereby International Minerals will acquire, in a cash and share transaction, all of the issued and outstanding shares of Metallic by way of a statutory plan of arrangement (the “Transaction”).

“We are progressing well with regards to the ongoing acquisition of Ventura, which we expect will close by early January 2010. The drilling program (using three machines) is ongoing and results continue to be very encouraging.”

Immediately prior to accepting the Transaction, Metallic terminated the existing arrangement agreement with Solitario Exploration & Royalty Corp. (“Solitario”) in accordance with its terms, originally entered into by Metallic on August 24, 2009 and amended on October 13, 2009, and has paid to Solitario the agreed termination fee of US$2.2 million. The support agreements of the MVG significant shareholders regarding the Solitario transaction have also been terminated.

Stephen J. Kay, President and CEO of International Minerals, said, “This business combination with Metallic is another significant step in enhancing the growth of International Minerals by building not only a larger base of feasibility-stage gold properties in the mining-friendly jurisdiction of Nevada but also adding instant cash flow by acquiring Metallic’s production royalty from Barrick’s Ruby Hill gold mine in Nevada. We believe that the shareholders of both companies will benefit tremendously by participating in the upside potential from this compelling combination.”

Miles Bachman, President and CEO of Metallic, said, “We are pleased that International Minerals has come forward with a superior proposal that gives our shareholders a higher cash component and a share component with greater liquidity. We believe the proposed transaction to be advantageous to Metallic’s shareholders and look forward to working with International Minerals to close the transaction.”

Details of the Transaction

• Consideration to be paid to Metallic shareholders will consist of US$24 million in cash and 8.5 million common shares of International Minerals.
• Assuming no exercise of Metallic stock options, each common share of Metallic will be exchanged for (i) a cash payment in the amount of US$0.4615 and (ii) 0.1635 of a common share of International Minerals. Stock options held by Metallic optionholders (an aggregate of 545,000 common shares) will be exchanged for stock options of International Minerals on similar terms.
• Post-Transaction and completion of International Minerals’ acquisition of Ventura Gold Corp. (“Ventura”), which is in progress, the current shareholders of Metallic are expected to hold approximately 7.4% of the issued and outstanding share capital of International Minerals.
• Metallic’s financial advisor, GMP Securities L.P., has advised the Board of Directors of Metallic (“Metallic Board”) that the consideration to be received by the Metallic shareholders pursuant to the Transaction is fair, from a financial point of view, to the Metallic shareholders.
• International Minerals has engaged BMO Capital Markets as its independent financial advisor to provide a fairness opinion to the board of directors as to the fairness, from a financial point of view, of the consideration being offered by International Minerals to Metallic.
• The Arrangement Agreement provides for a non-solicitation covenant on the part of Metallic, subject to customary "fiduciary out" provisions that entitle Metallic to consider and accept a superior proposal together with a right in favor of International Minerals to match any superior proposal.
• A break fee of US$2.5 million is payable by Metallic to International Minerals in the event that a superior unsolicited offer is accepted by Metallic or is payable by International Minerals to Metallic in the event that International Minerals determines not to proceed with the Transaction.
• The Transaction is subject to, among other things, receipt of regulatory, court and Metallic shareholder approvals. The Arrangement Agreement provides for the closing of the Transaction by February 28, 2010.
• The Arrangement Agreement is accompanied by support agreements with two shareholders and directors of Metallic representing approximately 66% of the issued and outstanding common shares of Metallic agreeing to vote in support of the Transaction.

Shareholder Approval by Metallic

The Transaction will be carried out by way of statutory plan of arrangement, on substantially similar terms to those which had been contained in the arrangement agreement with Solitario.

The Transaction must be approved by at least 66²/₃% of the votes cast by shareholders of Metallic at a special meeting of holders of common shares. The Metallic shareholder meeting to consider the Transaction is expected to be held in February 2010 (the “Meeting”) with the Transaction anticipated to close shortly thereafter. Further details of the Transaction will be included in the Management Information Circular of Metallic to be filed with the regulatory authorities and mailed to Metallic shareholders in connection with the Meeting.

Compelling Value of the Business Combination

• Post-Transaction financial strength with a pro-forma cash position of approximately US$26-$28 million (including expected further cash dividends from the Pallancata Mine and Ruby Hill mine royalty revenue)
• Increasing cash flow from the 40%-owned Pallancata silver-gold mine in Peru enhanced by the 3% Net Smelter Return (NSR) royalty from Barrick’s Ruby Hill gold mine.

The Ruby Hill Mine produced 98,000 ounces of gold in 2008 and at December 31, 2008 had published proven and probable gold reserves of 831,000 ounces and additional measured and indicated gold resources of 480,000 ounces. Metallic has been receiving approximately US$3-$4 million per year in royalty payments.

• International Minerals’ pipeline of projects in Peru and Ecuador will expand with the acquisition of Metallic’s two advanced gold projects in Nevada with significant measured and indicated resources:

(1) the Converse gold project, which lies in the prolific Battle Mountain/Cortez mineralized trend; and

(2) the Goldfield gold project, located in the historic Goldfield mining district, which, according to the Nevada Bureau of Mines, has historical production of approximately 4.2 million ounces of gold from 1903 to 1960.

For further information about the two projects, please see Metallic’s Web site at www.metallicventuresgold.com.

International Minerals intends to maximize the value of Metallic’s prospective Goldfield and Converse properties in Nevada, by immediately advancing the Goldfield project into the feasibility study stage with a goal of potential production within the next four to five years, and to carry out further drilling at Converse.

• The pending acquisition of the newly-discovered Inmaculada gold-silver deposit in Peru (located southwest of the Pallancata Mine), the principal asset of Ventura. The pending acquisition of Ventura was announced by International Minerals in September 2009. See details below.
• A proven exploration and development team that has discovered three gold-silver deposits in two countries in the past decade (the Pallancata Mine and the Inmaculada advanced drilling project in Peru, and the Rio Blanco high-grade development project in Ecuador).
• International Minerals has the financial and operational strength to complete all of the above projects with its current cash and human resources without any immediate need for additional financing.

Pending Acquisition of Ventura

On September 23, 2009, International Minerals and Ventura jointly announced a friendly all-share transaction for International Minerals to acquire all of the shares of Ventura through a statutory plan of arrangement.

Through this transaction, International Minerals will acquire Ventura’s 51% ownership and the right to earn a 70% interest (the remaining interest being held by Hochschild Mining) in the Inmaculada Project, located approximately 25km southwest of the Pallancata Mine.

The Inmaculada Project has estimated inferred resources of 483,000 ounces of gold and 16.6 million ounces of silver, contained in 3.7 million tonnes at 4.0 g/t gold and 139 g/t silver (on a 100% project basis). The property hosts multiple low-sulfidation epithermal vein systems.

Mr. Kay also provided an update of the proposed acquisition of Ventura, “We are progressing well with regards to the ongoing acquisition of Ventura, which we expect will close by early January 2010. The drilling program (using three machines) is ongoing and results continue to be very encouraging.”

Advisors

GMP Securities L.P., Toronto, is acting as financial advisor to Metallic and Fraser Milner Casgrain LLP, Toronto, is acting as legal advisor to Metallic, in connection with the proposed Transaction.

Axium Law Corporation, Vancouver, is acting as legal advisor to International Minerals and BMO Capital Markets has been engaged to provide a fairness opinion to the board of directors of International Minerals in connection with the proposed Transaction.

About Metallic

Metallic is an Ontario-incorporated exploration-stage gold company listed on the Toronto Stock Exchange. Metallic receives royalty income from the Ruby Hill gold mine located in Nevada and operated by Barrick. The company is focused on its two advanced-stage gold exploration projects: the "Converse Project" and the "Goldfield Project," both located in Nevada. Information on the mineral resource inventory of Metallic is available on the company's Web site.

About International Minerals

International Minerals is a silver-gold producer, explorer and developer with silver-gold production from its 40%-owned Pallancata Mine, one of the top-10 primary silver mines in the world. Estimated production (on a 100% basis) from the Pallancata Mine for 2009 is 8.0 million ounces of silver and 30,000 ounces of gold (40% attributable to International Mineral’s account). Production of approximately 10 million ounces of silver and 35,000 ounces of gold is expected in 2010.

The company has other interests in exploration level projects in Peru as well as the Rio Blanco gold-silver project and the Gaby gold project, both development stage projects in Ecuador.

International Minerals has been listed on the Toronto Stock Exchange since 1994 and the Swiss Stock Exchange (“SIX”) since 2002.

This release is for informational purposes only and it is not intended to be proxy solicitation materials and it does not constitute an offer to sell or a solicitation of an offer to buy securities of Metallic or International Minerals.

Cautionary Statement:

Some of the statements contained in this release are “forward-looking statements” within the meaning of Canadian securities law requirements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements in this release include statements regarding estimates of production and information on a potential corporate acquisition. Factors that could cause actual results to differ materially from anticipated results include risks and uncertainties such as: risks in maintaining production and processing rates, risks of cost escalation, risks of estimating mineral resources and reserves, variances between mineral reserves and actual mineral production, risks of completing pending acquisitions and other risks and uncertainties detailed in the Company’s Renewal Annual Information Form for the year ended June 30, 2009, which is available at www.sedar.com under the Company’s name. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.