Caldera Agrees to Settle Debts With Insiders and Amend CanBiomine Transaction

October 14, 2008 Filed Under: Diamond Mining, Precious Metal  

Caldera Resources Inc. announced that it has agreed to settle the debts of four creditors of Caldera, who are also insiders of Caldera, and to amend the Letter Agreement to acquire CanBiomine Resources Inc. (”CanBio”) (the “Transaction”) dated September 24, 2008 and announced in a Press Release dated September 25, 2008. The Company is currently experiencing financial difficulties.

The parties commenced due diligence following the execution of the Letter Agreement. On October 2, 2008, the TSX announced its Delisting Review of the Company. As a result, CanBiomine determined that in order for it to proceed with the Transaction, the insiders of Caldera had to settle their debts for stock in the Company. The parties agreed, subject to TSX approval, that the transaction would be valued after giving effect to the proposed debt settlement. Certain insiders of the Company and the disinterested directors of the Company agreed to the debt settlement referred to below for the issuance of 8,195,488 common shares priced at $0.05 per share in settlement of debts of $409,774.40 (the “Debt Settlement”).

The Debt Settlement constitutes less than 10% of current outstanding capital and would not require shareholder approval. However, after giving effect to the Debt Settlement, CanBiomine shareholders are to be issued a further 2,000,000 common shares for a total of 27,000,000 common shares for the Transaction. Pursuant to the TSX policies, the shares issued for the Debt Settlement plus the 27,000,000 common shares issuable to the shareholders of CanBiomine for the Transaction must be aggregated for the purpose of determining if the TSX rules limiting share issuances to 25% of current outstanding capital have been exceeded. Since the aggregate number of shares to be issued for the Debt Settlement and the Transaction is 35,195,488 shares, being 33% of current outstanding capital, before giving effect to the Transaction and the Debt Settlement, shareholder approval is required under the TSX policies. The Company has applied to the TSX for a waiver of the shareholder approval requirement, based upon section 604 (e) of the TSX Company Manual, on the basis of the financial hardship as set out below in order to complete the Transaction.

As part of the Debt Settlement, four insiders, Lanza Holdings Pty Ltd. (controlled by the C.F.O. and Director of Caldera, Mike Langoulant), Reindler Co., (controlled by the President, C.E.O. and Director of Caldera, Chris Reindler), Ron Winston (who holds over 18.6% of Caldera’s current outstanding common shares) and Peggie Reindler (who is the wife of Chris Reindler), will settle $409,774.40 worth of debt in exchange for 8,195,488 common shares of Caldera (the “Debt Settlement Shares”), priced at $0.05 per share, and a promissory note in the amount of $62,510, payable to Lanza Holdings Pty Ltd.

Lanza Holdings Pty Ltd., a corporation controlled by Caldera’s Chief Financial Officer and Secretary, Mike Langoulant, will acquire 3,355,945 common shares, which comprises 3.2% of Caldera’s current outstanding capital, and when combined with current controlled holdings, Mike Langoulant will control 4,308,661 common shares, which comprises 4.1% of Caldera after giving effect to the Debt Settlement. Reindler Co., a corporation controlled by Caldera’s President, Chief Executive Officer and Director, Christopher W. Reindler, will acquire 4,140,318 common shares, which comprises 3.9% of Caldera’s current outstanding capital, and when combined with current controlled holdings (including his wife’s holdings) Christopher W. Reindler will control 7,448,796 common shares, which comprises 7.1% of Caldera after giving effect to the Debt Settlement. Ron Winston will acquire 216,655 common shares, which comprises 0.2% of Caldera’s current outstanding capital, and when combined with current controlled holdings, Ron Winston will control 19,588,712 common shares which comprises 18.7% of Caldera after giving effect to the Debt Settlement. Peggie Reindler, the wife of Christopher W. Reindler, will acquire 482,570 common shares, which comprises 0.5% of Caldera, and she does not currently hold or control any common shares of Caldera. None of the foregoing calculations take into account the effect of dilution from the Transaction.

The insider debt settlements are exempt from the valuation and minority shareholder approval requirements of Multilateral Instrument 61-101 (”MI 61-101″) by virtue of the exemptions contained in section 5.5(a) and 5.7(1)(a) of MI 61-101 in that the fair market value of the consideration for the securities of the Company to be issued to insiders does not exceed 25% of its market capitalization. A material change report will be filed and the Debt Settlement and the Transaction is scheduled to close in less than 21 days. This shorter period is reasonable and necessary in the circumstances as the Company wishes to complete the Transaction in a timely manner.

There will be no effect on control of the Company as a result of the Debt Settlement and the Transaction.

Financial Hardship

An independent committee of the Board of Directors, comprised of John L. Daniels and Michael Hendriks, has recommended that the Company proceed with the Debt Settlement and the Transaction. The Debt Settlement and the Transaction will improve the working capital position of the Company and the independent committee has determined that the Transaction is reasonable for the Company in the circumstances. Pursuant to TSX policies, the closing of the Debt Settlement and the Transaction will not occur until five (5) business days have elapsed after issuance of this press release.

About Caldera

Caldera is engaged in diamond exploration in Australia. Three projects are located in the Pilbara region of northern Western Australia, one of which is joint ventured with Mr. Ronald Winston. The Company also has two projects located adjacent to the Ellendale Lamproite Field in the Kimberley region of Western Australia. Caldera also has three base metal/gold projects in South Australia. One of these projects is the Mt.Carulina Project, which is an Olympic Dam – style base metal/gold target.