DIAMOND PAGE — Pure Gold, Cayo plan merger

Two substantial landholders in the Alberta diamond play, Pure Gold Resources (PUG-T) and Cayo Resources (CAYO-C), have agreed to pool their interests.

The proposed merger calls for Pure Gold shareholders to receive one new share of the amalgamated company for every five shares held, whereas Cayo shareholders will receive three new shares of the amalgamated company for each share held.

The amalgamated company, Pure Gold Minerals, will have 24 million shares outstanding, 19 million of which (or 79.5%) will represent former Pure Gold shares, with the balance representing former Cayo shares.

The amalgamated company will hold interests in more than 48.1 million acres in Alberta, in addition to Pure Gold’s holdings in the Northwest Territories.

The company’s Alberta holdings will include:

* a 15% interest in the Buffalo Hills joint venture in the north-central part of the province, where Ashton Mining of Canada (ACA-T) has discovered 16 kimberlite bodies to date. Ashton can earn a 42.5% interest in the 1.4 million-acre property from Alberta Energy (AEC-T) by spending $5 million on exploration;

* a 15% interest in the 4.4-million-acre Birch Mountain property, a joint venture with Ashton and Alberta Energy, each of which holds a 42.5% interest; * a 49% interest in the 22.8-million-acre Caribou Hills property, subject to a joint venture with Ashton and Alberta Energy, each of which holds a 25.5% interest;

* a 100% interest in the Edmonton property, which comprises 9.3 million acres in the central-eastern part of the province, extending from Wabamun Lake to the Saskatchewan border; and

* a 75% interest in the 10-million acre Lethbridge property, on which 50 circular magnetic anomalies have been identified. The remaining interest is held by Reclamation Management (RMLL-C).

The proposed merger has yet to be approved by shareholders and regulators.