Potash One to acquire Potash North

Vancouver-Potash One Inc. and Potash North Resource Corp. announced Jan. 22 that they have entered into a binding letter of intent (LOI) containing the principal terms by which Potash One will acquire all of the issued and outstanding common shares of Potash North. The LOI contemplates that each Potash North shareholder will receive 0.3125 common shares of Potash One for each common share of Potash North. In addition, all outstanding convertible securities of Potash North will be exchanged for comparable convertible securities of Potash One in an amount and at exercise prices adjusted in accordance with the same exchange ratio. The exchange ratio represents an approximate 29 percent premium for the shares of Potash North over the 20-trading day period prior to the execution of the LOI. There are currently 65,745,002 Potash North common shares issued and outstanding, 2,750,000 outstanding options to purchase Potash North common shares, 38,672,000 Potash North common shares issuable pursuant to outstanding share purchase warrants, and an additional 5,000,000 common shares and 5,000,000 common share purchase warrants issuable pursuant to an outstanding unsecured convertible note. Potash One owns 7,583,850 common shares of Potash North, which represents 11.5 percent of the currently outstanding shares of Potash North and an additional 7,583,850 share purchase warrants. Certain shareholders, including Potash One and all the directors and officers of Potash North, have agreed to vote their shares in favor of the combination. The transaction is expected to close by May 15, 2009. The companies say the combination will create one of the strongest junior potash development companies in Canada. Potash One will be fully funded through to completion of feasibility on its solution mining amenable potash development property located in southern Saskatchewan. Current cash of the resulting company would be approximately $50 million.