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Prophecy Platinum To Buy Ursa Major Minerals

Prophecy Platinum Corp. (CVE:NKL) said Friday it has entered into a binding letter of agreement to acquire Ursa Major Minerals (TSE:UMJ) in an all-share transaction.

Prophecy said it will issue one common share for every 25 outstanding common shares of Ursa. Ursa options and warrants will also be exchanged for options and warrants of Prophecy.

The offer represents approximately $0.15 per common share of Ursa based on Prophecy's share price of $3.70 as at March 1, 2012, representing a premium of 130 percent to Ursa's closing price as at March 1, 2012 of $0.065.

Prophecy is also to subscribe for $1 million common shares of Ursa by way of private placement financing at $0.06 per share, subject to regulatory approval. Upon placement completion, John Lee and Greg Hall, current Prophecy directors, will be appointed to Ursa's board.

The acquisition will allow Prophecy to become a mid-tier resource company with a diversified pipeline of Platinum nickel projects, including the fully permitted open-pit Shakespeare Platinum group metals-nickel-copper mine near Sudbury, with near term production capabilities.

The feasibility study by Micon International in January 2006 for Shakespeare and subsequently updated in 2008, defined a probable reserve of 11,828,000 tonnes grading 0.33% nickel, 0.35% copper, 0.02% cobalt, 0.33 grams per tonne (g/t) Platinum, 0.36 g/t palladium and 0.18 g/t gold. The mineral reserve is to a maximum depth of 250 metres below surface

In addition, the deal provides Ursa shareholders with liquidity, sustaining capital and opportunity to participate in exploration and development upside of Prophecy's Wellgreen and Lynn Lake properties.

The Wellgreen project in the Yukon has over 10 million ounces of Platinum-palladium-gold inferred resource. Active drilling is ongoing with a pending preliminary economic assessment study.

Manitoba's Lynn Lake nickel-copper has over 262 million pounds of nickel, and 138 million pounds of copper in the measured and indicated categories.

Following the deal's close, Prophecy plans to publish a new Shakespeare feasibility and examine project economics and metal prices prior to making a production decision.

At the appropriate time, joint venture partners may be sought to develop Wellgreen, Lynn Lake, and Shakespeare, with Wellgreen set to be Prophecy's focus.

"We believe with this production ready mine, Prophecy would raise its profile, broaden investment appeal, and gain further trading liquidity," Prophecy's chairman John Lee said in a statement.

"Ursa's board recognize the synergy and that this deal is potentially accretive to both Ursa and Prophecy shareholders."

The deal includes a break fee of $1.5 million, which is payable to Prophecy should Ursa accept a superior un-solicited bid.
Based on 79.7 million Ursa common shares outstanding, Prophecy is expected to issue 3.19 million shares as part of the transaction.

If required, both companies said they would call a special meeting of shareholders in late May to vote on the transaction. The deal is slated to close on June 15.

President and CEO of Ursa, Richard Sutcliffe, added: "We are very pleased to have reached this agreement with Prophecy which provides an excellent opportunity to advance the Shakespeare Mine.

"Our shareholders will to participate in a combined company with an outstanding portfolio of assets and substantially improved market capitalization and liquidity."

Once the deal is completed, Sutcliffe will be appointed to Prophecy's board.

Earlier in January, Prophecy announced that it would initiate underground drilling at its Wellgreen Platinum group metals (NYSEARCA:PGM) nickel copper project.

The miner plans to drill about 9,000 metres to target infill areas of its existing resource, as well as the potential expansion of the resource to the south, where a pit area is being designed for the company's preliminary economic assessment due to finish by the first quarter of 2012.

The company has received drill permits and has mobilized a crew to the site to prepare drill stations. Drilling is expected to continue year-round, covering the one-kilometre strike of the Wellgreen East Zone.

In addition, the results from the underground drilling will potentially upgrade its inferred resource to the measured and indicated categories.

In July 2011, the company reported 289 million tonnes grading 0.38 percent nickel, 0.35 percent copper, and 1.18 grams per tonne (g/t) PGM plus gold in the inferred category, and 14 million tonnes grading of 0.69 percent nickel, 0.62 percent copper and 2.25 g/t PGM plus gold in the indicated category.

The company is a Canadian nickel and Platinum group metals exploration explorer with projects in Canada, Argentina and Uruguay. In Canada, it holds the Lynn Lake project in Manitoba, as well as Wellgreen.