Goldmember, I read it the same way. It looks like deal was drawn up by a Las Vegas loan shark. IMHO.

In order to operate in the US, Premium has to exist there as a corporate entity. The TSX listed company "Premium Exploration Inc." (PEM) owned several companies including "Elk City Mining", and "Premium Exploration USA Inc" (PEM USA).

I believe that PEM USA held all of the mineral claims and leases and contracts. Essentially, PEM USA has all the assets. I guess I could check with the BLM on this one.

I believe to sell off 24.9% of PEM USA is to sell off 24.9% of PEM's assets in PEM USA. It would not matter how much the company dilutes PEM, the new owner of 24.9% of PEM USA would continue to own this percentage.

There is quite the penalty attached to rejecting this deal. If PEM directors (shareholders) or the TSX rejects the deal, the purchaser receives double his money ($400,000) and 4,200,000 warrants at $0.05. I assume that after the consolidation we would be looking at a $0.10 trading price, so the warrants appear to be at a significant discount.

There are other questions, like where would Premium com up with the $400,000 it would have to pay the purchaser? The $200,000 is gone and there is nothing in the treasury. Would PEM then offer payment in shares (8,000,000 at a value of $0.05)?

If the deal falls through, the PURCHASER could conceivably end up owning 12,200,000 new shares or 46% of PEM for $210,000. This would be a significant discount from th $2M market cap the company has today. Sweet deal for the PURCHASER.

I think the identity of the PURCHASER is material information that should be disclosed to the market immediately.

Do the math for yourselves and look at the possible scenarios.