"An investment in knowledge pays the best interest."

 TO ACQUIRE FORRESTER METALS TO ESTABLISH A ZINC FOCUSED EXPLORATION AND DEVELOPMENT COMPANY

 

Zinc One Resources Inc. (Z.V) and Forrester Metals Inc. (VEM.H) have entered into a binding agreement whereby Zinc One has agreed to acquire all of the issued and outstanding common shares of Forrester and complete a private placement financing of $10-million. Zinc One's proposed acquisition of Forrester is based on a positive outlook for the zinc price and the attractiveness of the zinc assets contained in the Forrester portfolio.

Jim Walchuck, chief executive officer of Zinc One, stated: "We believe that this transaction is a tremendous step in moving Zinc One towards becoming a zinc producer. Although there are other quality assets in Forrester, it is the high-grade zinc Bongara and Charlotte Bongara properties which will become the flagship project of Zinc One. This is an exciting opportunity for Zinc One and all its shareholders."

Martin Walter, president of Forrester, commented, "Combining Forrester's projects with Zinc One's strong corporate finance team, along with the proposed financing, ensures further development at the Bongara zinc project and also offers Forrester shareholders a nice premium to the current share price."

Details of the arrangement

The transaction will be effected by way of a court-approved plan of arrangement under the Business Corporations Act (Ontario). Under the terms of the agreement, each shareholder of Forrester will receive one common share of Zinc One for every 5.5 common shares of Forrester. Assuming completion, exercise of all convertible securities of Forrester and completion of the debt settlement (as defined below), Zinc One will issue a total of 30,855,273 Zinc One shares to the shareholders of Forrester.

Based on a price of 75 cents per Zinc One share, being a volume-weighted average price for the last seven trading days, the 5.5-to-1 conversion ratio represents an offer price of 14 cents per Forrester share, being a premium of 119 per cent of Forrester's volume-weighted average price for the period comprising the 30 trading days ended on Jan. 30, 2017.

Following the completion of the transaction and the debt settlement, Zinc One will have issued and outstanding shares of up to 87,630,513 Zinc One shares.

All outstanding options, warrants and convertible debentures of Forrester will remain outstanding (if not exercised prior to closing of the transaction) and will be adjusted to give effect to the transaction in accordance with their respective terms or pursuant to the agreement. Prior to closing of the transaction, Forrester will be permitted to issue up to 27.04 million Forrester shares at a deemed price of 12.5 cents per share to settle outstanding indebtedness of approximately $3.38-million.

Each company's board of directors unanimously approved the terms of the transaction and recommends that its shareholders (if applicable) vote in favour of the transaction.

The transaction will require the approval by at least 66-2/3rds per cent of the votes cast on the special resolution by Forrester shareholders and, if required, Zinc One shareholders present in person or represented by proxy at the shareholder meetings.

The transaction is subject to due diligence by each party, completion of the private placement financing, shareholder approval, applicable regulatory and TSX Venture Exchange approvals, and satisfaction of customary provisions. The transaction is expected to close in the second quarter of 2017.

The agreement includes customary deal protection provisions, including a break fee of $1-million payable by the breaching party, and a right to match and non-solicitation provision in favour of Zinc One.

Management team and board of directors

The parties anticipate that the management team and board of directors for Zinc One will remain unchanged. The management team will continue to be Mr. Walchuck (chief executive officer and president) and Natasha Tsai (chief financial officer), and the board of directors will be Mr. Walchuck, Greg Crowe, W. Barry Girling, Gunther Roehlig and a mutually agreed representative of the current Forrester board of directors.

Private placement financing

In connection with the proposed transaction, Zinc One plans to complete a non-brokered private placement financing of 16,666,667 units at a price of 60 cents per unit for gross proceeds of $10-million. Each unit will consist of one Zinc One share and one-half of one share purchase warrant, with each whole warrant entitling the holder to purchase one additional Zinc One share at a price of 90 cents per share for a period of 24 months from the date of issue.

Zinc One will also have an overallotment option, for a period of 30 days from closing of the private placement financing, to offer an additional 15 per cent of the number of units at 60 cents per unit, solely to cover overallotments, if any.

The proceeds from the private placement will be used for exploration on the high-grade zinc Bongara and Charlotte Bongara properties and for general working capital purposes.

About Bongara zinc mine and Charlotte Bongara zinc project

The Bongara zinc mine zinc-oxide mineralization was discovered in 1974, and since then, various companies have completed exploration programs across the area. The mineralization is concentrated along and proximal to a northwest-trending anticlinal axis over approximately 2.5 kilometres. From the southeast edge of the project, the Mina Grande, Mina Chica and Bongarita mine areas were subject to sampling from pits and trenches, as well as shallow drilling over a distance of approximately 1.2 kilometres. This zinc-oxide mineralization appears to continue to the northwest into an additional exploration area known as Campo Cielo, where pits and trenches have also exposed additional high-grade, zinc-oxide mineralization in historical pits and trenches.

The adjacent Charlotte Bongara zinc project was explored by Solitario Resources in 1994. Cominco Ltd. later completed five drill holes for 592 metres within the property, two of which encountered near-surface, high-grade zinc oxide mineralization. Between 2007 and 2011, Rio Cristal Zinc optioned the project and eventually drilled 95 drill holes for a total of 7,722 metres on the Cristal and Charlita prospects. Rio Cristal drill results included 29.5 per cent zinc across 15.5 metres, 26.1 per cent zinc across 12.5 metres and 29.7 per cent zinc across 11.5 metres (the cited intervals are drill-intercept widths, and true widths are unknown).

Neither qualifying persons nor each company has verified the data herein with samples.

The technical content of this news release has been reviewed and approved by Mr. Walchuck, chief executive officer and director of Zinc One, and Bill Williams, director of Forrester, each a qualified person as defined by National Instrument 43-101.