Reliance Resources to acquire American Iron Corp.

• American Iron Corp. is focused on acquiring and developing a portfolio of iron ore projects in Minnesota, including a high-grade iron-ore and tailings
• Additional iron ore projects under evaluation with large tonnage potential
• American Iron is comprised of experienced North American mining and management team
• 6 million post-consolidation Reliance shares to be issued on Closing, with additional 4 million Reliance shares to be issued thereafter in tranches upon attainment of certain development milestones
• Reliance to consolidate its shares on 5 for 1 basis and change its name to "American Iron Corp." on Closing

SYDNEY, Australia, April 7, 2014 /CNW/ - Reliance Resources Limited (TSXV: RI) ("Reliance") or ("the Company") is pleased to announce that it has entered into an agreement to acquire Minnesota-based company American Iron Corp. ("American Iron"), an iron ore focused exploration and development company seeking to acquire projects having potential for low pre-development capital expenditure and significant exploration potential in the United States (the "Mineral Properties").

Pursuant to a definitive acquisition agreement (the "Agreement") between Reliance and American Iron, American Iron has agreed to cause its shareholders (the "AI Shareholders") to sell all of their shares of American Iron (the "American Iron Shares") to Reliance (the "Transaction") subject to and in accordance with, among other things, the following terms:

a) Reliance has agreed to acquire the American Iron Shares by issuing a total of 10 million Reliance common shares ("RI Shares") on a post-consolidated basis (see below), as follows:

• 6 million RI Shares on closing of the Transaction (the "Closing");
• a further 2 million RI Shares subsequent to Closing upon American Iron publishing a mineral reserve of 30MT contained metal in respect of any Mineral Property; and
• a further 2 million RI Shares subsequent to Closing upon American Iron publishing a mineral reserve equivalent to 50MT at 50% iron (Fe) in respect of any Mineral Property;

b) Prior to the Closing, Reliance shall have completed a share consolidation on the basis of five (5) existing RI Shares for one (1) new RI Share (the "Consolidation"), and Reliance shall have changed its name to "American Iron Corp." (the "Name Change");

c) Prior to the Closing, American Iron shall have acquired the Mineral Properties and published a National Instrument 43-101 ("NI 43-101") compliant technical report in respect of a Mineral Property or Mineral Properties that will be its qualifying asset;

d) On or before the Closing, Reliance shall have completed a minimum financing of $2 million at a price to be determined in the context of the market (the "Financing").  The Financing may be by way of equity or debt private placement or any other form of financing acceptable to the parties.

e) Each of Reliance and American Iron shall have been satisfied of its due diligence review of the other party, acting reasonably; and

f) On Closing, the Board of Directors and Officers of Reliance shall consist of the following individuals:

• George Young - President, CEO and director
• Gary Lewis - non-executive Chairman and director
• Geoffrey Hill - director
• John Levings - director
• Ian Mitchell - director
• Dr. Michael Nelson - director

All of the above individuals, except for Geoffrey Hill, are current directors of Reliance.  Geoffrey Hill is an experienced company director and the non-executive Chairman of ASX-listed Mount Gibson Iron Limited, a leading producer of iron ore products from three operating mines.

The Agreement contains additional terms and conditions that are customary for transactions of a similar nature. The Closing date is scheduled for April 30, 2014 or such later date as the parties to the Agreement may agree in writing. The Transaction, Share Consolidation, Name Change and Financing will be subject to the approval of the TSX Venture Exchange and any necessary shareholder approval.

Reliance presently has a total of 122,152,099 RI Shares issued and outstanding.   Immediately upon Closing of the Transaction, the AI Shareholders will hold 6 million post-Consolidation RI Shares representing approximately 19.7% of the issued RI Shares on a post-Consolidation basis (not taking into account any equity dilution which may occur as a result of the Financing).  Subject to the fulfilment of the other conditions specified in (a) above, the AI Shareholders may increase their shareholdings in Reliance to up to approximately 29.0% of the total issued and outstanding RI Shares (not taking into account any equity dilution which may occur as a result of the Financing). The AI Shareholders are at arm's length to Reliance and its current directors and officers.  On Closing, no person, either acting alone, jointly or acting in concert with any other person, shall directly or indirectly hold or acquire more than 20% of the issued and outstanding RI Shares (post-Consolidation).

American Iron has been evaluating the Mineral Properties targeted for acquisition prior to the Closing.  Many of these properties are believed to contain materials that can be rapidly developed and placed into operation.  Potential products include high-grade iron ore tailings, ore stockpiles, and conventional high-grade iron ores located in Minnesota, USA.  The Company has submitted its first lease application and has obtained permits for systematic sampling in connection with the preparation of a NI 43-101 compliant technical report covering a property located near Hibbing, Minnesota, with high grade iron tailings and ore stockpiles.  Sampling has been completed on the property, and the technical report is in progress, and will be filed upon its completion and the granting of a lease on the property, which the Company hopes will occur in the next few weeks.  The Company is aiming to provide rapid growth and cash flow from properties being evaluated for acquisition to drive a growth strategy for shareholders.

The use of the term "iron ore" throughout this News Release is only intended as a geological description and does not imply that any economic viability has been determined. 

American Iron is also assessing a number of properties with potential for large tonnage conventional iron ore discovery and production in the Midwestern states of the USA.

Reliance's non-executive Chairman, Gary Lewis, commented:

"The proposed acquisition of American Iron Corp. is the result of nearly twelve months of negotiation and due diligence and is an excellent outcome for Reliance. For some time, we have been assessing a number of project opportunities and the Board believes that this transaction presents the best potential to deliver optimum returns for our shareholders.

It is clear that the US economy is in a recovery and growth phase and having exposure to this market presents significant upside for Reliance.

American Iron's targeted assets are anticipated to be highly prospective for near-term, low-cost mine development and they are located in a favourable mining jurisdiction with access to domestic and international shipping routes. The region hosts a number of other large iron ore projects, which will provide American Iron with consolidation opportunities, and these are now being assessed for acquisition.

Geoffrey Hill's appointment to the Board on closing is a great addition. Geoff is a seasoned company director and brings considerable skills and understanding of the iron ore sector to the Company. These will be invaluable as we advance the development of the iron ore portfolio of assets. He is responsible for bringing this transaction to Reliance and is committed to realising its full potential value."

Cautionary note: Until a mineral resource has been estimated and a project has been positively assessed for its economic feasibility, there is no certainty that any of the proposed operations will be economically viable.

While Reliance is working to complete the Transaction, it is also actively investigating options to obtain maximum benefit from its existing Indonesian assets. Shareholders will be notified at an appropriate time on the outcome of these efforts.

Reliance will update shareholders on the progress of the Transaction and on American Iron's short-term milestones.

On behalf of the Board of Directors of Reliance

Gary Lewis
Non-executive Chairman and Director

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 or accuracy of this release.

Forward-Looking Information

This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking information") within the meaning of applicable securities laws.  Forward-looking information is generally identifiable by use of the words "believes," "may," "plans," "will," "anticipates," "intends," "could", "estimates", "expects", "forecasts", "projects" and similar expressions, and the negative of such expressions.  Forward-looking information in this news release include statements about the proposed Transaction, proposed management restructuring, American Iron's proposed acquisition of its Mineral Properties and the Company's future plans, objectives and business strategy. 

In connection with the forward-looking information contained in this news release, the Company has made numerous assumptions, regarding, among other things, the assumption that the parties will complete the principal conditions for completion of the Transaction, including but not limited to the Company's completion of the Financing and American Iron's acquisition of the Mineral Properties; the receipt of necessary shareholder and regulatory approvals; and the assumption the Company will continue as a going concern and will continue to be able to access the capital required to advance its projects and continue operations.  While the Company considers these assumptions to be reasonable, these assumptions are inherently subject to significant uncertainties and contingencies.  In addition, there are known and unknown risk factors which could cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information contained herein.  Known risk factors include, among others: the inability of American Iron to acquire the Mineral Properties; the possibility that the Financing will not be completed; and the possibility that the Company may not be able to continue as a going concern in the near term.

All forward-looking information herein is qualified in its entirety by this cautionary statement, and the Company disclaims any obligation to revise or update any such forward-looking information or to publicly announce the result of any revisions to any of the forward-looking information contained herein to reflect future results, events or developments, except as required by law.

SOURCE: Reliance Resources Ltd.

George Young at [phone]