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Long Harbour Enters Into Letter Agreement With Composite Transport Technologies


VANCOUVER, British Columbia, Nov. 21 – Long Harbour Exploration Corp. (the "Company" or "LHC") is pleased to announce that it has entered into a letter of intent dated November 20, 2012 (the "LOI") with Composite Transport Technologies, Inc. ("CTT"), a private company based in Charleston, West Virginia that specializes in composite technologies for the aviation transport industry. Pursuant to the terms of the LOI, the Company has the opportunity to obtain up to a 70% interest in a joint venture (the "JV") with CTT.

Highlights of the proposed transaction include:

  • JV will receive exclusive global rights to CTT's technologies, which has patents pending on both composite materials and manufacturing processes; 
  • Immediate access into the growing aircraft cargo container, referred to as a unit loading device ("ULD"), market of the passenger and transport aviation industry; 
  • JV able to leverage extensive aviation industry network to commence pilot production with major aviation industry involvement; and 
  • Plan of arrangement which includes a potential spin-out of the Company's current mineral properties onto the Canadian National Stock Exchange (the "CNSX") 

As a defining transaction that would require LHC to change its main business focus from its two wholly-owned uranium properties located in the Athabasca Basin, the world's leading source of high grade uranium, the Company plans to complete a statutory plan of arrangement (the "Transaction") which will constitute a change of business ("COB") for the Company under the policies of the TSX Venture Exchange (the "TSXV").

The proposed spin-out and listing is conditional upon receipt of all applicable regulatory approvals, including the approval of the CNSX. There can be no assurance that such listing will be completed.

LHC will provide up to C$ 7.45 million into the JV in order to obtain a 70% ownership at closing. The JV also expects to become eligible for various forms of non-dilutive financing, such as government subsidies and aviation industry-targeted grants, and tax return incentives; the former which will be utilized towards expansion with the latter to be allocated according to JV ownership. LHC will also be able to make payments to CTT in the form of shares, which shall be priced at $0.25 per share. LHC currently intends to raise $2.0 million in order to finance one year of operations for both the JV and the Company.

The Company's contemplated JV partner, CTT, is comprised of specialists from both the composite materials and aerospace industries that have under the close guidance of aviation industry leaders developed a ULD that is up to 50% lighter, displays greater fire resistance properties and is stronger than those of its aluminum peers. The JV would focus on bringing CTT's technologies, which has filed patent applications, into production phase while leveraging LHC's financial capabilities and CTT's extensive networks in the airline and air cargo transport sectors.

Jim Wheeler who has formerly served in a number of leadership positions including as the Vice President at FedEx and with the International Air Transport Association, and is currently CEO of Evergreen Airlines and a long-standing CTT board member, commented, "The role of composites in the aircraft world meets the two most critical elements of commercial aviation - weight and capital conservation. Whether air cargo or large passenger aircraft are involved, weight is a critical factor with ever increasing fuel prices; thus fuel savings are precious. The strength and durability of composites serves to stretch the capital dollars airlines must invest. Funding the CTT project will provide the sophisticated investor a significant opportunity to advance two of the most important elements in commercial aviation; capital and energy intensity".

The JV will be run by a Steering Committee comprised of 3 nominees from each of LHC and CTT, though LHC reserves the initial rights to hold CEO and CFO positions. The Steering Committee will review candidates for the position of CFO post-closing and may later review industry specialists for the role of CEO. LHC has been very impressed with the quality of CTT's management and advisors, which include:

  • A senior advisor to and former executive at FedEx whose responsibilities included running and managing the company's advanced aeronautical technologies engineering group; 
  • A globally renowned executive whose accolades include receiving Financial World's CEO of the Year Silver Medal and Wall Street Transcript's CEO of the Year Bronze Medal; 
  • A former corporate counsel of FedEx, its President of Aircraft Acquisitions and Sales, and President of Federal Express Aviation Services and founder of a major aircraft leasing firm; 
  • The former Chairman of Cargo Transport for the International Aviation Transport Association (IATA) and current CEO of an airline / cargo carrier; 
  • The Founder and former President and CEO of a leading composite aircraft components manufacturing / R&D company based in Ontario, Canada; 
  • An aerospace / automotive engineer whose vision was to create a "superior and greener" ULD for the aviation industry. 

Allan Tweddle, one of the founders and the CEO of CTT, commented, "We are pleased to create a JV with LHC as it allows us to fully develop our significant technologies while benefiting from Canada's unique benefits, incentives and opportunities. We also believe that Long Harbour financial management's skillsets complement our manufacturing capabilities and anticipate moving forward together swiftly."

According to CTT, the JV's initial targeted market size for its ULDs is approximately US$ 1.0 billion, but according to Air Cargo World forecasts, the air cargo market is expected to experience 300% growth in cargo traffic and 66% growth in freighter fleet over the next 20 years. In addition, because the ULD sector has a natural turnover rate of approximately 20% annually, new technologies, such as the JV's, benefit from an aviation industry hoping to minimize fuel consumption while maximizing safety and "green" initiatives.

The completion of the Transaction is subject to a number of conditions, including, but not limited to, the execution of a definitive agreement, completion of satisfactory due diligence, approval of the Transaction by the board of directors and, if applicable, shareholders of each of the Company and CTT, securing adequate financing, and the approval of the TSXV and the CNSX. There can be no assurance that the Transaction will be completed as proposed, or at all.

Under TSXV policy a sponsor is generally required for a change of business unless an exemption is available or a waiver is granted by the TSXV. The Company expects to apply for an exemption from sponsorship based on closing a brokered private placement of at least $500,000 but there can be no assurance that such exemption will be available.

Long Harbour Exploration CEO, Peter Espig, commented, "We are very excited about the contemplated JV with CTT; LHC shareholders are expected to not only continue to maintain shares in our uranium properties, but also hold shares in a very exciting joint venture opportunity. CTT's ULD is technically impressive, but, more importantly, it will save airliners fuel, increase safety and allow increased payload abilities due to its lighter weight. In addition, the strength of its board and advisory committee enhances the JV's ability to deal with industry leaders".

The Company will provide additional transaction details in subsequent news releases.

-----

Source: Long Harbour Exploration Corp.

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