Aquiline acquiring Absolut (October 02, 2007)

Vancouver – Under a binding agreement Aquiline Resources (AQI-T, AQLNF-O) will acquire Absolut Resources (ABS-V, ABSKF-O) through a three-way transaction seeing the creation of a gold division in Aquiline.

Currently holding almost 2.8 million Absolut shares, representing about 9.7%, Aquiline plans to amalgamate a wholly-owned subsidiary into Absolut and then issue 0.1 share for each Absolut common share. Warrants will be treated on the same basis subject to price adjustment equal to the exchange ratio.

The planned deal is a 70% premium based on Absoluts share value on September 28th and a 47% premium over its two-month volume weighted average.

Looking to have the deal closed by year-end, Aquiline will issue about 2.6 million shares in the transaction or less than a 5% dilution.

Both Boards have thrown support behind the proposed deal that will still require regulatory approvals and the vote of at least two-thirds of the disinterested shareholders of Absolut.

Upon conclusion the new Aquiline gold arm will hold Absoluts advanced-stage Pico Machay project in west-central Perus Huancavelica province, a high-sulphidation epithermal gold system.

Using a 0.3 gram gold per tonne cut-off grade, an inferred resource of 15.9 million tonnes of 0.85 gram gold has been reviewed at Pico Machay for about 437,000 contained oz. gold in the oxide and mixed zone. A further 8.9 million inferred tonnes at 0.51 gram gold has been estimated in the sulphide zone, about 146,000 contained oz.

Absolut is in the midst of completing engineering and metallurgical studies to secure project permitting at Pico Machay. Planned development would be an open pit, heap leach operation. Being near surface, the project is expected to have a low strip ratio.

Absolut also holds the Chaparra project in southern Peru, hosting a series of high-grade gold mineralized veins. Small-scale historic mining is reported to have averaged about 18.2 grams gold.

Into its new gold division, Aquiline will kick in the Calcatreu project in Rio Negro Province, Argentina. Calcatreu is a gold-silver mineralized vein system hosting an indicated resource of 6.16 million tonnes grading 3.04 grams gold and 28.1 grams silver per tonne, about one-quarter of which are classified as oxide. A further 1.9 million inferred tonnes at 2.1 grams gold and 19.4 grams silver was also tabled.

An initial feasibility study completed on Calcatreu earlier this year indicated positive economics based on a 2,000-tonne-per-day open pit operation producing about 97,000 oz. of gold equivalent annually over a 4.5-year mine life. Cash costs of US$280 per oz. are projected over life-of-mine with total capital costs of $79.2 million to build the operation.

Although the study reviews the use of cyanide in the extraction of gold from Calcatreu ore, the province of Rio Grande has placed restrictions on its use in mining.

“With gold prices approaching record highs and Absolut making steady progress towards production at Pico Machay, now seemed like an excellent time for Aquiline to expand its gold interests,” explained Aquiline president and CEO Marc Henderson in a prepared statement. “Our Calcatreu project is an attractive asset – particularly in the current price environment – but has been totally overshadowed by Navidad.”

Aquiline is also advancing its Navidad silver project located in southern Argentinas Chubut province. Based on a 50 gram silver equivalent cut-off grade, the deposit hosts an indicated resource of 93.4 million tonnes at 102 grams silver and 1.4% lead for about 305 million contained oz. silver. A further 11 million inferred tonnes grading 65 grams silver was also tabled.

In mid-2006 Aquiline was awarded the project, in trust, following a legal battle where it was ruled that IMA Exploration (IMR-V, IMR-X) breached a 2002 confidentiality agreement with Newmont Mining (NMC-T, NEM-N). IMA seeks to pursue an appeal to the ruling with the Supreme Court of Canada.