TORONTO, Oct. 26 /CNW/ -- Fletcher Nickel Inc. (TSX: FL) has negotiated terms for a merger with Atlas Precious Metals Inc (APMI) whose primary asset is a 65% joint venture interest in the Karachipampa lead-silver smelter outside of Potosi, Bolivia. The Kivcet-process smelter was completed in 1984 and was placed on care and maintenance until February of 2008 when APMI took possession of the Karachipampa smelter complex. In June 2005, APMI signed a joint venture agreement with Corporacion Minera de Bolivia (COMIBOL) to add an acid plant to the existing Karachipampa lead smelter and combine it with a new zinc-silver smelter. APMI has since acquired an acid plant for shipment and installation and made substantial upgrades in the computerization of all electrical control systems and in various plant restorations required for the commencement of commercial production.

The final Karachipampa Joint Venture project will consist of a 60,000 ton per annum lead smelter and new 150,000 ton per annum zinc smelter. The primary objective of the merged company is to gain significant capital appreciation through becoming a fully integrated and diversified mining company with a focus on precious metals production, especially silver, through the operation of the Karachipampa Smelter Joint Venture. Fletcher Nickel's Texmont Mine property is considered to be a valuable strategic sulphide nickel resource which might be developed to feed nickel ores to an on-site carbonyl refining plant for production of high purity ferro-nickel and cobalt products, in future.

Under terms of a letter of intent between the parties, Fletcher Nickel will seek all requisite approvals to merge with privately-held APMI. In February 2008 APMI completed a private placement of 30 million treasury shares for proceeds of $15 million and it presently has 61.7 million shares outstanding. The terms of the letter of intent contemplate the issue of four Fletcher treasury shares for each outstanding APMI share (before a 4-for-1 consolidation) conditional on, among other things, Fletcher's and APMI's Board and shareholder approvals, Toronto Stock Exchange (TSX) and all other regulatory approvals, a coincident financing of at least $20 million and the merged company's consolidated shares continuing to be listed on the TSX. Outstanding warrants and options of both companies would be continued based on the consolidation ratio adjustment.

Fletcher's current shareholders would own approximately 9.5% and current APMI shareholders would own approximately 90.5% of the merged company before financing (6,482,900 shares of 68,225,990 then outstanding). Fletcher directors Michael O'Leary, Patrick Crowley and Bruce Reid would join APMI's Roy Shipes, Neil Adshead and Jamie Macintosh to form the Board of Directors of the merged company.