Westaim executes amalgamation agreement with NUCRYST Pharmaceuticals

 The Westaim Corporation (TSX: WED) today announced the execution of an amalgamation agreement with NUCRYST Pharmaceuticals Corp. (NASDAQ: NCST; TSX: NCS). Under the agreement, NUCRYST will amalgamate with a newly-formed, wholly-owned subsidiary of Westaim (the "Amalgamation"). Under the terms of the Amalgamation, each holder of NUCRYST common shares (other than Westaim) will receive one redeemable preferred share in the capital of the amalgamated company, which will be redeemed for US$1.77 in cash upon completion of the Amalgamation. Pursuant to the Amalgamation, Westaim will receive all of the common shares of the amalgamated company.

The Amalgamation follows the execution of a definitive agreement between NUCRYST and subsidiaries of Smith & Nephew plc. (LSE: SN; NYSE: SNN) under which NUCRYST has agreed to sell all of its operations and assets including all rights to its proprietary nanocrystalline silver technology to Smith & Nephew for cash considerations of US$21 million, plus the value of working capital, and subject to certain adjustments (the "Sale Transaction"). The closing of the Sale Transaction is subject to customary conditions including the approval of NUCRYST shareholders. In this regard, Westaim has entered into an agreement with Smith & Nephew under which it has agreed to vote its shares in NUCRYST in favour of the Sale Transaction, subject to certain limited exceptions applicable where a financially superior proposal has been made.

The completion of the Amalgamation is subject to certain conditions including the closing of the Sale Transaction and the approval of NUCRYST shareholders including the approval by a simple majority of the votes cast by NUCRYST shareholders other than Westaim and the directors and officers of NUCRYST. The Sale Transaction and the Amalgamation will be submitted to the shareholders of NUCRYST for consideration at a special meeting to be called for such purpose. Details regarding the Smith & Nephew Sale Transaction and the Amalgamation agreement will be included in NUCRYST's management information circular which is expected to be mailed to shareholders in late November, 2009 for a shareholders meeting to be held in December, 2009.

"We believe that the amalgamation of Westaim and NUCRYST is in the best interest of the shareholders in both companies," said Cameron MacDonald, President & CEO of Westaim. "This transaction will strengthen Westaim's cash position as we review opportunities to deploy our capital and maximize the value of our assets."

Following the completion of the Amalgamation, NUCRYST intends to delist from the TSX and NASDAQ stock exchanges.