Exall shareholders approve spinoff (November 24, 2006)

Shareholders of Exall Resources (EXL-T, EXALF-O) have approved a reorganization plan that will see current shareholders receive a dividend of shares in a new company, Exall Energy, that will hold Exall’s hydrocarbon assets.

The spinoff is part of a plan to merge with Southern Star Resources (SSR-T), creating a company to hold a 100% interest in the Gold Eagle gold property near Red Lake. The new company would be called Gold Eagle Mines.

The agreement to merge, amended earlier this month, means Exall shareholders would have a 0.5428-to-1 consolidation and then exchange their Exall shares for an equal number of Gold Eagle shares. Southern Star shareholders would exchange shares one-for-one. Exall shareholders would have about 53% of the new company’s shares.

The new oil and gas company would have about 16.8 million shares that would be distributed to shareholders; with 83.2 million Exall shares outstanding, that makes for a one-for-five distribution. Exall Energy would then do a $5 million financing to bring some cash into the company.

At the joint venture’s Gold Eagle project, drilling on the Bruce Channel target, a deep extension of the Cochenour-Willans gold structure beneath Red Lake, recent drilling has extended the size of the known mineralized zone, which now measures about 615 metres laterally and about 1,100 metres along the dip of the structure.

Results from seven recent drill holes show intersections mainly in the 2- to 3-metre range, some at very high grades. One hole, BC19-2, returned two intersections, one of 3.8 metres grading 108.3 grams gold per tonne and one of 3.9 metres grading 107.7 grams per tonne. Other intersections showed average gold grades between 5.5 grams and 25.6 grams per tonne.