Pan Terra Industries enters into letter of intent to acquire Kombat Mine in Namibia

VANCOUVER, Dec. 28, 2011 /CNW/ - Pan Terra Industries Inc. ("Pan Terra" or the "Company") (TSX.V: PNT) is pleased to announce that it has entered into a letter of intent ("Letter of Intent") with Manila Investments (PTY) Ltd. ("Manila") and its shareholders to acquire 80% of the issued and outstanding common shares of Manila.

The Kombat Mine

Manila is a private company incorporated under the laws of Namibia based in Windhoek, Namibia, whose principal asset is the agreement made in October 2011 among Manila, Grove Mining Namibia (Proprietary) Limited and others in respect of the acquisition by Manila of the Kombat Mine and related assets, including all mining surface infrastructure and equipment and prospecting licenses related thereto.

Manila has formed a strategic partnership with Epangelo Mining Company (mining company owned by the Republic of Namibia) to reactivate the mine into a fully functioning mining and concentrating facility for the benefit of job creation and local beneficiation.

The Kombat Mine has been on care and maintenance since 2008. Pan Terra is attracted to the potential to extract known copper, lead and silver resources from within the existing mine workings and to discover new zones of copper, lead and silver within the land package as well as a possibility to delineate significant manganese resources not previously evaluated by historical owners.

The Acquisition

Pan Terra will acquire from the selling shareholders (the "Vendors") on closing of the acquisition (the "Closing") 80% of the issued and outstanding Manila Shares. The remaining 20% of the Manila Shares will be held by Epangelo Mining Company (Pty) Ltd. and certain local Namibian partners (collectively referred to as the "Other Manila Shareholders").

Pan Terra will issue to the Vendors 7,000,000 common shares of Pan Terra and 7,000,000 warrants of Pan Terra and make pre-Closing cash payments of $450,000 ($100,000 of which has been paid) and a Closing cash payment of $9,550,000.  The Pan Terra warrants will have an exercise price equal to the financing price in a concurrent Private Placement with an expiration date 24 months from the Closing.

Definitive Agreement

Pursuant to the Letter of Intent (which supersedes the exclusivity agreement announced by Pan terra on December 7, 2011), Manila has agreed to deal exclusively with Pan Terra to enter into a definitive agreement until the earlier of February 28, 2012 and the date of the execution of the definitive agreement.

The definitive agreement will include customary conditions to Closing plus the following specific conditions: (i) receipt of the approval of Acquisition by the Namibian Competition Committee and the approval of the transfer of all applicable Kombat assets by the Ministry of Mines and Energy (Namibia), (ii) the appointment of two nominees of the Vendors, who are acceptable to the TSX Venture Exchange to act as directors of Pan Terra, (iii) the completion of a private placement, and (iv) the execution and delivery of a shareholder agreement among Pan Terra and the Other Manila Shareholders in form and substance acceptable to Pan Terra.

The definitive agreement will also include a director nomination right and an equity participation right in favour of the Vendors provided that the Vendors maintain a certain percentage share ownership in the Company.  Under the nomination right, so long as the Vendors beneficially own at least 5% of the issued and outstanding PNT Shares, they will have the right to nominate two members of the board of directors of the Company for five years.  Under the participation right, so long as the Vendors beneficially own at least 10% of the issued and outstanding PNT Shares, they will have the right to participate in certain treasury offerings for three years to maintain their percentage ownership in Pan Terra.

Finder's Fee

Subject to TSX Venture Exchange acceptance, a finder's fee in the amount of $500,000 will be paid on Closing. The finder's fee will be paid in Pan Terra common shares (using the price per security in the concurrent private placement as the deemed price).

Update on Mertens

Further to the Company's press release of May 30, 2011, Pan Terra reports that following the completion of Pan Terra's due diligence, the proposed transaction with Mertens Mining and Trading (PTY) Limited, a private company incorporated under the laws of Namibia, has been terminated by Pan Terra.

Qualified Person

Mr. James A Turner, the Company's Qualified Person as defined by National Instrument 43-101, has read and approves the information contained herein.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy of accuracy of this news release.

All statements in this news release, other than statements of historical fact, that address events or developments that Pan Terra expects to occur, are "forward-looking statements". Forward-looking statements are necessarily based on estimates and assumptions that are inherently subject to known and unknown risks, uncertainties and other factors that may cause Pan Terra's actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Such factors include, without limitation: results of due diligence investigations, the ability to enter into legally binding agreements in respect of the Kombat Mine and related assets, significant capital requirements and the ability to raise equity capital; the risks of obtaining and maintaining the validity and enforceability of the necessary licenses and permits and complying with the permitting requirements in, Namibia; the lack of certainty with respect to foreign legal systems, which may not be immune from the influence of political pressure, corruption or other factors that are inconsistent with the rule of law. Forward-looking statements are not guarantees of future performance, and actual results and future events could materially differ from those anticipated in such statements. Pan Terra expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, events or otherwise, except in accordance with applicable securities laws.