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Probe Metals, Adventure Gold to merge

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Probe Metals, Adventure Gold to merge

Probe Metals Inc.and Adventure Gold Inc.entered into a definitive agreement to merge, in a bid to create a new leading goldexplorer and developer with properties in Quebec and Ontario, according to an April7 statement.

Under the terms, Adventure shareholders will receive 0.39 ofa Probe share for each share held. The exchange ratio is equivalent to considerationof 28.5 Canadian cents per Adventure common share, based on the closing price ofProbe on April 6, and implies a total equity value of approximately C$22.8 million.

The exchange ratio represents a 36% premium to Adventure's closingprice, and a 23% premium to both companies' 20-day volume-weighted average prices.Probe has currently 34,914,205 common shares issued and outstanding. Upon completionof the transaction, existing Probe and Adventure shareholders will own approximately53% and 47% of the merged entity, respectively.

Probe and Adventure's boards of directors have unanimously approvedthe deal. Meanwhile, Adventure's board of directors recommends that their shareholdersvote in favor of the proposed transaction.

Furthermore, Probe plans to complete a nonbrokered private placementwith Goldcorp Inc. comprising4.4 million common shares priced at 66 cents each for proceeds of about C$2.9 million.Upon closing, Goldcorp will own approximately 10,577,846 common shares of Probe,representing 15.0% of the company's issued and outstanding common shares.

Additionally, Goldcorp will be granted additional rights by Probe,allowing it to maintain its equity ownership interest in the combined company andthe right to participate in any future equity financings to hold up to a 19.9% ownershipin the merged entity.

Moreover, the senior management after the merger will includeall current management of Probe, with David Palmer as CEO and president, as wellas Marco Gagnon from Adventure, who will be appointed executive vice president.Jamie Sokalsky, former Barrick GoldCorp. CEO, will continue as Probe chairman.

The board will comprise six directors, including all of the currentboard members of Probe. Meanwhile, one director from Adventure will be appointedto the merged entity's board upon closing of the transaction.

The transaction will be carried out by way of a court approvedplan of arrangement and is subject to approvals from the TSX Venture Exchange, theSuperior Court of Quebec and other closing conditions.