October 3, 2008
Gilla Acquiring Terra Merchant Resources Corporation
GILLA INC. (OTCBB: GLLA) ("Gilla"), has entered into a definitive agreement effective October 3, 2008 to acquire all the shares of Terra Merchant Resources Corporation ("Terra"), a private company incorporated in Ontario, Canada. Terra has secured rights to a gold exploration property in Angola, known under the name of Salutar Commercio Mining Concession, located some 120 km north of Cabinda City, Angola. The concession covers approximately 200 square kilometers. Through a Joint Venture agreement, Terra has rights to 70% of the mineral concession.
The main terms of the agreement provide for each Terra shareholder to receive 1 share of Gilla common stock together with one warrant for one half of one Gilla common stock exercisable for 6 months at $0.60 per common share. Gilla will issue a maximum of 10,000,000 common shares, plus up to 5,000,000 common shares from the exercise of warrants, for a total of not more than 15,000,000 new common shares. As well, Gilla and Terra will use their best efforts to raise by Closing date, $350,000 for Gilla and $250,000 for Terra. Credifinance Capital, a shareholder of Gilla, whose President and CEO is also the President and CEO of Gilla, will receive a fee of 1,000,000 common shares of Gilla.
Terra's NI 43-101 for the Salutar Commercio Mining Concession was prepared on May 8, 2008. Terra has now completed Phase I of an extensive stream sampling program on its property. The sampling program consisted of collecting the stream sediment 'fines' in each stream within selected portions of the property. The samples were collected in each stream immediately up-stream from the intersection points of the streams. Generally, two samples were collected from each sample site, one for gold analysis and the other for multi-element analysis.
Stanley Robinson, Vice-President, Exploration for Terra, stated: "Alluvial gold is known to occur in stream sediments in the area of the concession. Therefore, it is anticipated that the stream sediment sampling will identify areas of anomalous gold values for follow-up regolith geochemical sampling which in turn may delineate gold-in-regolith anomalies that will warrant evaluation by drilling."
A total of 431 samples have been shipped to SGS Lakefield Research Africa (PTY) Ltd, and ALS Laboratory Group Mineral Division - ALS Chemex in Johannesburg, South Africa. Gold in the stream sediments will be analyzed by the Bulk Leach Extractable Gold "BLEG" method and multi-elements will be determined by the ICP method. Both laboratories are accredited to international standards. Phase II of the sampling plan is planned subsequent to the completion of Phase I sampling. Phase II sampling will follow up on anomalous gold results from Phase I and complete further stream sampling on the concession.
Two new directors have been added to the board of Gilla. Stanley Robinson, a highly respected mining engineer currently based in Toronto, Canada, with extensive African experience, has agreed to join the board. Also joining the board is Jacques Bouchard, a partner at Heenan Blaikie LLP, a prominent Canadian law firm, where he acts as the firm's Director of International Business. Over the past few years, he has been lead counsel for many international mandates, has led reforms of the judicial system in Cameroon, and has extensive experience acting for resource companies with assets in many countries in Africa. He is on the Board of the Canadian Council on Africa, the Canada-Congo business council and is the honorary general counsel in Quebec for the Government of Angola. Gilla has also named Daniel Barrette, currently with Terra, as its Chief Operating Officer. Mr. Barrette will oversee all mining operations and will liaise with the various government agencies in Africa.
"Gilla is moving according to our plans, acquiring diversified and promising mining assets in Africa," said Georges Benarroch, President of Gilla. "Current global market conditions have basically stopped in their tracks and most junior resource companies will need to find ways of attracting investors when markets calm down. We shall continue to look for attractive African assets and count on our shareholders to support our operations. With the contemplated closing of a small private placement for approximately $400,000 concomitant with this acquisition of Terra and Gilla, we should be in a position to take the necessary steps allowing Gilla to open its office in Cameroon, revise the NI 43-101 report prepared by Christian Derosier in the spring of 2008, and begin Gilla's drilling program, while continuing Terra's operations in Angola."
About Terra Merchant Resources Corporation: Terra is a private Ontario (Canada) corporation which holds mining rights in Angola, with completed NI 43-101 reports.
About Gilla Inc.: Gilla is a Nevada corporation which, through Free Mining Corp. S.A, owns 2 rutile exploration permits in Cameroon: Sele and Mfoumou, with completed NI 43-101 reports.
Disclosures: Georges Benarroch, Director and President of Gilla, is also Director and President of Credifinance Capital Corp., ("CFCC") a major shareholder of Gilla which received a fee for the transaction. Georges Benarroch is also Director and President of Credifinance Securities Limited, ("CFSL"), which is acting as agent and advisor to Gilla.
The information contained in this release includes forward-looking statements that are subject to risks and uncertainties that could actual results to differ materially.
Certain statements contained herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to materially different from those expressed or implied. Forward-looking statements involve risks and uncertainties, including but not limited to, such risks as are described in the Company's annual report.
Contact: Linda Kent (416) 884 8807
SOURCE: Gilla Inc.