PRESS RELEASEMEGA URANIUM LTD.: “MGA” (TSX-V)ISSUED AND...

PRESS RELEASE
MEGA URANIUM LTD.: “MGA” (TSX-V)
ISSUED AND OUTSTANDING
COMMON SHARES: 40,352,913
FOR IMMEDIATE RELEASE: January 10, 2006
MEGA ENTERS INTO AGREEMENT TO ACQUIRE HINDMARSH RESOURCES LTD.
• Mega has entered into an Agreement to acquire the Australian uranium company, Hindmarsh Resources Ltd. (“Hindmarsh”) through an off-market offer of 3.63 million Mega common shares
• Hindmarsh holds, or is earning, interests in uranium exploration properties totaling 13,600 km2 in South Australia and the Northern Territory
Toronto, Ontario, Canada, January 10, 2006 – Mega Uranium Ltd. (“Mega”) (“MGA”: TSXV) is pleased to announce that it has entered into an Agreement with the Australian Stock Exchange (“ASX”)-listed, Hindmarsh Resources Ltd (“Hindmarsh”), whereby Mega, or a wholly-owned subsidiary of Mega, will offer to acquire all of the issued shares and options of Hindmarsh for a total consideration of 3.63 million Mega shares in a conditional off-market takeover offer. The board of directors of Hindmarsh has indicated that it supports the takeover and will recommend that the Hindmarsh shareholders and optionholders accept the offer. The offer is conditional on minimum acceptances of 90% of each class of the Hindmarsh security holders, the approval of the TSX Venture Exchange, and other conditions typical for a takeover of this nature.
Through this acquisition, Mega will obtain interests in extensive tenements over large tracts of prospective uranium ground in South Australia and the Northern Territory – the two jurisdictions of Australia with significant uranium discovery potential where uranium mine development is permitted. In addition, Mega will acquire Hindmarsh’s geological team, which has considerable experience in uranium exploration in South Australia and elsewhere in Australia. Mega will also acquire Hindmarsh’s current cash reserves of approximately A$2.5 million, which will be available to fund the exploration of the Hindmarsh properties over the next two years.
South Australia is one of the most attractive uranium exploration targets in the world based on its significant uranium prospectivity, its favourable regulatory environment and the State Government’s support and facilitation of uranium exploration and development. The State contains the world’s largest uranium resource (Olympic Dam) and the world’s largest producing ISL uranium mine (Beverley), plus numerous
smaller uranium deposits and occurrences of a variety of styles. The Hindmarsh properties, which are at various exploration stages from grass roots to drill testing, contain potential for uranium discoveries of the Iron Oxide Cu-Au-U (IOCGU) deposit style similar to Olympic Dam, Unconformity- Related types, and Sediment-Hosted deposits in Tertiary palaeochannels similar to the South Australian deposits of Beverley and Honeymoon.
Overall, in South Australia, Hindmarsh holds exploration title to, or is earning interests in, a total of over 12,000 km2 of ground in the Gawler Craton and Flinders Ranges (refer to the attached figure). The ground held by the company itself comprises eight granted Exploration Licences (total 4,464 km2) and nine Exploration Licence Applications (total 5,319 km2). In two of the granted Exploration Licences (total 1,495 km2), the ASX-listed Southern Gold Ltd. is earning a 30% interest in the uranium rights through its wholly-owned subsidiary Southern Uranium Pty. Ltd. In addition, in tenements held by Southern Gold Ltd., Hindmarsh is earning 80% of the uranium rights in three Exploration Licences (total 1,510 km2) and 35% of all minerals in two Exploration Licences (total 955 km2).
In the first half of 2006, drill testing is scheduled for two IOCGU targets in the Gawler Craton and for three Sediment-Hosted uranium prospects in Tertiary palaeochannels.
In the Northern Territory, Hindmarsh has a farm-in agreement (Neutral Junction Joint Venture) with the ASX-listed Mithril Resources to earn 80% of an Exploration Licence (1,400 km2) in the Georgina Basin, located some 220km south of Tennant Creek. The ground covers 80km of the unconformity between the Arunta Province Proterozoic basement and Palaeozoic sediments and contains a geological setting indicating potential for uranium deposits of the Sediment-Hosted style.
Additional information on Hindmarsh Resources Ltd. can be found at www.hindmarshresources.com.au.
Stewart Taylor, President of Mega Uranium, stated ”We are pleased to acquire the Hindmarsh properties and geological team and look forward to drill testing a number of interesting prospects over the coming months. Also we intend to follow up other quality uranium opportunities identified by the Hindmarsh team elsewhere in South Australia and the Northern Territory.”
Kate Hobbs, Managing Director of Hindmarsh Resources, stated “We see this as an excellent outcome for our shareholders as it gives them exposure to Mega’s attractive portfolio of projects in some of the most prospective uranium regions of the world, as well as Hindmarsh’s very prospective tenement holding in South Australia and the Northern Territory.”
In order to complete the acquisition, Mega will prepare and deliver a bidder’s statement and offer to Hindmarsh, each shareholder and optionholder of Hindmarsh, the ASX and the Australian Securities and Investments Commission (copies will be found at www.sedar.com when issued). Mega’s offer will remain open for a minimum period of one month after issue of its bidder’s statement and offer. Holders of Hindmarsh securities accepting the offer will receive their consideration of Mega shares on or before the earlier of (i) one month after the offer is accepted or, if the offer is subject to conditions when accepted, within one month after the offer becomes unconditional; and (ii) 21 days after the end of the offer period. The directors of Hindmarsh have also agreed that if the offer is successful, they will not sell any Mega shares received as consideration for a period of thirty (30) days after completion of the takeover offer.
Stewart Taylor, President of Mega Uranium, is the Qualified Person responsible for this news release.
Mega Uranium Ltd. is a Toronto – based mineral resources company with a focus on uranium properties in Australia, Argentina, Mongolia and Canada. Further information on Mega can be found on the company’s website at www.megauranium.com
This news release contains forward-looking statements within the meaning of the “safe harbour” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties and other factors that may cause Mega’s results to differ materially from expectations. These include risks relating to market fluctuations, property performance and other risks. These forward-looking statements speak only as of the date hereof. Mega Uranium disclaims any intent or obligation to update these forward-looking statements and cautions investors from placing undue reliance on forward-looking statements. Mega does have an ongoing obligation to disclose material information as it becomes available.
THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
For further information, please contact:
Mega Uranium Ltd.
Sheldon Inwentash, CEO
Telephone: (416) 643-7630
[email protected]
www.megauranium.com