SRH Stone Resources Limited

VANCOUVER, Aug. 12, 2011 /CNW/ -- VANCOUVER, Aug. 12, 2011 /CNW/ - Stone Resources Limited (TSX-V: SRH) ("Stone" or the "Company") announced today that it has entered into a subscription agreement (the "Agreement") to acquire majority control of A1 Minerals Limited ("A1"), a mining company incorporated in Australia and listed on the Australian Securities Exchange ("ASX"). The Agreement provides for the subscription by Stone of (i) 89,730,000 ordinary shares of A1 ("A1 Shares") at an issue price of A$0.025 per share (the "Private Placement"); and (ii) a A$12,000,000 redeemable convertible note (the "Convertible Note" and together with the Private Placement, the "Subscription"). The Convertible Note bears interest at 5% per annum, is convertible by Stone at A$0.035 per A1 Share if exercised within 12 months of issuance or at A$0.06 per A1 Share thereafter, is repayable 24 months after issuance, and will be secured by a first-ranking fixed and floating charge. Upon completion of the Private Placement, Stone will own 30.9% of the outstanding A1 Shares, and upon conversion of the Convertible Note, Stone will own 61.4% of the outstanding A1 Shares (assuming full A1 Shareholder participation in the Share Purchase Plan ("SPP") described below and the issue of A1 Shares to Stone to maintain its 30.9% shareholding following completion of the SPP, also as described below). Total proceeds of the Subscription to A1 will be up to A$14,243,250 (up to A$15,361,139 if funds raised from the issue of A1 Shares to maintain Stone's shareholding at 30.9% are included). Completion of the Private Placement and the Convertible Note must occur simultaneously, provided that at the option of Stone, subject to compliance with the Australian Corporations Act, the ASX Listing Rules and having obtained conditional approval from the TSX Venture Exchange ("TSXV"), Stone may waive the conditions to the Private Placement and subscribe at an interim date for 30,000,000 A1 Shares, representing 13.00% of the issued and outstanding A1 Shares, with the balance of the A1 Shares issuable in the Private Placement to be delivered at closing of the Subscription. A1 owns a gold exploration and production mineral project in the Laverton region of Western Australia. Additional information relating to A1 and the mineral project is available under A1's profile on the ASX website. A1 has agreed not to enter into any discussions with third parties in relation to any similar proposal subject to standard fiduciary carve outs. The Agreement provides that, subject to the completion of the Subscription, A1 will conduct a share purchase plan in Australia, providing existing A1 shareholders with the opportunity to subscribe for new A1 Shares at a price of A$0.025 per A1 Share, up to a maximum of A$2,500,000. To the extent that A1 Shares offered under the SPP are not subscribed for by A1 shareholders, Stone may (subject to prior A1 shareholder approval) elect to subscribe for such A1 Shares. On completion of the SPP, Stone may (subject to prior A1 shareholder approval), by written notice to A1, require A1 to issue to Stone that number of A1 Shares, at an issue price of A$0.025 per A1 Share, that results in Stone owning 230.9% of the A1 Shares. Pursuant to the Agreement, following completion of the Private Placement, Stone will be entitled to appoint two directors to the board of A1. Upon conversion of all or part of the Convertible Note into A1 Shares, Stone's representation on the A1 board shall be increased commensurate with its shareholding in A1, and Stone shall accordingly be entitled to appoint majority of the directors to the board of A1 upon full conversion of the Convertible Note into A1 Shares. A1 will use the proceeds of the Subscription and the SPP to discharge all its external debt obligations, for working capital purposes or such other purposes as consented to by Stone. Stone intends to fund the Subscription from the proceeds of its previously announced private placement, which has been conditionally approved by the TSXV. Completion of the Subscription is subject to various conditions, including approval by the shareholders of A1, and obtaining conditional approval from the TSXV. Should Stone be unable to obtain conditional approval for the Subscription from the TSXV, the Agreement provides that Stone shall transfer and assign all its rights, benefits, obligations and liabilities of and under the Agreement to a nominee, Stone Mining Limited, which will be under no legal obligation to obtain TSXV approval. It is expected that Stone would be compensated by Stone Mining Limited for all reasonable and necessary expenses and costs incurred by Stone in respect of the Subscription prior to such assignment. About Stone Resources Limited Stone Resources Limited (TSX-V: SRH) is a company incorporated in Bermuda and listed on the TSXV in Canada. The Company is involved with mineral resources exploration and development in Tanzania. Stone plans to expand and develop its business using its effective team of experts in exploration, geology, metallurgy, mine engineering, law and finance. Cautionary Statement on Forward-Looking Statements The information in this document contains certain forward-looking statements with respect to acquisition activities of the Company, based on assumptions about future courses of action. Although management has a reasonable basis for the conclusions drawn, risk factors and uncertainties may cause actual results to differ materially from those currently anticipated in such statements. These risks and uncertainties relate to such factors as the ability of the Company and A1 to successfully conclude the Subscription, negotiate definitive agreements, obtain the consent of A1 shareholders, and receive requisite approvals including that of the TSXV. In view of these uncertainties we caution readers not to place undue reliance on these forward-looking statements. Statements made in this document are made as of the date hereof and the Company disclaims any intention or obligation to update or revise any statements made herein, except in accordance with applicable securities laws. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/August2011/12/c3508.html p Kelei Xinbr/ Vice-President and Corporate Secretarybr/ +1 (604) 303-9070 /p

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