Abacus Mining & Exploration Corporation ("Abacus" or the
"Company") (TSX VENTURE: AME) is pleased to announce that it has
signed an investment agreement (the "Investment Agreement") with
KGHM Polska Miedz S.A. ("KGHM") to form a joint venture (the "Joint
Venture") to advance Abacus' Afton-Ajax copper-gold project (the
"Project") located near Kamloops, B.C. through bankable feasibility
study ("BFS") and into production. KGHM is the world's ninth
largest copper producer with annual production of over 500,000
tonnes, and the world's third largest silver producer with annual
output approximating 1,100 tonnes.
A conference call and live audio webcast will be held on
Tuesday, May 4, 2010 at 8:30a.m. pacific time (11:30a.m. eastern
time). The live audio webcast and presentation can be accessed from
Abacus' website at www.amemining.com.
Highlights of the Agreement:
-- Formation of a Joint Venture to fast track the development of a mine at
the Afton-Ajax camp by combining Abacus' interests in the camp with the
financial backing and operational expertise of a leading global copper
and precious metals producer
-- Capital funding commitment by KGHM of US$37 million to fully fund the
Project through BFS for a 51% interest in the Project
-- Funding provisions for the entire Project capex
-- Strategic partnership to jointly identify and develop other global
targets leveraging Abacus' mineral exploration expertise and KGHM's
financial strength and operational expertise
-- An immediate C$4.5 million private placement into Abacus by KGHM
-- Option for KGHM to acquire a further 29% interest in the Project upon
completion of BFS for an additional payment of up to US$35 million
The transaction is expected to close by the end of the second
quarter of 2010 or shortly thereafter, but no later than Sept. 30,
2010, and is subject to approval by Abacus' shareholders and the
customary regulatory approvals.
Under the terms of the Investment Agreement, following an
immediate private placement in Abacus of C$4.5 million, KGHM will
invest US$37 million to fund the Project through BFS and earn a 51%
interest in the Project. Upon completion of the BFS, KGHM will have
the option to acquire a further 29% in the Joint Venture (for a
total 80% interest in the Joint Venture) for cash consideration of
US$0.025 per pound copper for 29% of the Proven and Probable copper
equivalent reserve, to a maximum of US$35 million. At that time,
KGHM will arrange the financing for its (80%) proportionate
interest in the Project capex and will offer to arrange financing
for Abacus' (20%) proportionate interest in the Project capex on
commercially reasonable terms.
Commenting on the transaction, Tom McKeever, Executive Chairman
of Abacus said: "The alignment of our interests with a major global
copper producer such as KGHM has several distinct advantages for
Abacus and its plans to advance the Afton-Ajax Project to
production. It provides the capital funding for corporate
operations during the bankable feasibility stage and development
stage of the Joint Venture without the need for further financing.
It also eliminates the uncertainty associated with financing the
Project's capital requirements. The additional upside potential to
collaborate with KGHM on future projects provides an exciting
opportunity to create considerable shareholder value. I believe
this transaction provides an exceptional opportunity to accelerate
Abacus' transition into a world class copper and precious metals
group."
Mr. Herbert Wirth, President of The Management Board of KGHM
added: "We at KGHM are very pleased to have entered into this
partnership with Abacus Mining to jointly advance the Afton-Ajax
Project into an industry leading mining operation. We anticipate
that from this collaborative relationship will flow a number of
other prospective copper projects in Canada and elsewhere, to meet
our growing production profile."
A. Details of the Initial Investment
i. C$4.5 million Private Placement into Abacus
Upon signing the Investment Agreement, KGHM has agreed to immediately
enter into a C$4.5 million private placement involving the purchase of
15 million common shares (approximately 8.75% of the shares issued and
outstanding following the private placement) in the capital of Abacus at
a price of C$0.30 per share. The private placement is expected to close
not later than May 10, 2010 and is subject to regulatory approval.
ii. Payment to the Joint Venture of US$37 million in cash to acquire 51%
interest
KGHM will acquire a 51% interest in the Project by investing US$37
million in cash at closing of the transaction, to be allocated to: (A)
completion of the BFS and certain other obligations, and (B) exploration
of other targets in the Afton-Ajax Camp, in accordance with a jointly
approved budget.
B. Development Option
Following the completion of the BFS, KGHM will have the option to
acquire an additional 29% interest, for a total 80% direct interest in
the Joint Venture, for cash consideration of US$0.025 per pound for the
corresponding 29% of Proven & Probable copper equivalent reserves (as
defined in the BFS) up to a maximum of US$35 million. This payment will
be applied directly towards Abacus' proportionate share of the Project's
capital costs, estimated at US$535 million in Abacus' Preliminary
Economic Assessment ("PEA") written by Wardrop Engineering Inc. and
dated July 31, 2009.
KGHM will arrange the financing for its proportionate share of 80% of
the Project's capital costs and will offer to arrange the financing for
the balance of Abacus' proportionate share of 20% of the Project's
capital costs on commercially reasonable terms.
CIBC World Markets Inc. has acted as financial advisor and Davis
LLP has acted as legal advisor to Abacus. Abacus has received an
opinion from CIBC World Markets to the effect that, as of the date
thereof, the proposed transaction is fair, from a financial
viewpoint. TD Securities Inc. has acted as financial advisor and
Stikeman Elliott LLP and Chadbourne & Park LLP have acted as
legal advisors to KGHM.
The Investment Agreement has been unanimously approved by the
board of directors of Abacus. The transaction is subject to
approval by the shareholders of Abacus and Abacus will call a
special meeting of its shareholders to approve the transaction, to
be held on or about June 22, 2010. The directors and officers of
Abacus will vote their shares in favour of the transaction and will
recommend that other shareholders do likewise. The parties have
also agreed to complete a definitive Joint Venture Agreement and
ancillary agreements.
Conference Call and Webcast
Abacus will host a conference call and webcast on Tuesday, May
4, 2010 at 8:30a.m. pst (11:30a.m. est)
Dial-In Numbers:
North American toll-free 1-866-226-1793
Other 416-340-2218
Playback will be available for 2 weeks:
North American toll-free 1-800-408-3053 Pass Code 3553131
Other 416-695-5800
On Behalf of the Board,
ABACUS MINING AND EXPLORATION CORPORATION
Doug Fulcher, President and Chief Executive Officer
Tom McKeever, Executive Chairman
About Abacus
Abacus is an exploration and development company with a 43-101
compliant positive preliminary economic assessment report
(announced June 22, 2009) for its Ajax copper/gold project located
10 kilometres southwest of Kamloops, British Columbia. The report
contemplates a 60,000 tonne per day operation producing an average
of approximately 110 million pounds of copper (approx. 50,000
tonnes) and 100,000 ounces of gold in concentrate annually.
Sensitivity analyses approximating metal prices (US$3.00 per pound
copper and US$1,000 per ounce gold) in the assessment indicate a
NPV of $1.46 billion discounted 8% over a 23 year mine life, with
an IRR of 35.4%, cash costs of $0.90 per pound copper, and payback
of 2.0 years. The Ajax extension remains open along strike and at
depth. Mineral resources that are not mineral reserves do not have
demonstrated economic viability.
Eco Tech Laboratory Ltd. of Kamloops, B.C., completed all of
Abacus' analytical work on the aforementioned drill project. A
quality-control program, using specific standards and blank samples
is in place. Robert G. Friesen, P.Geo., the Company's Senior
Geologist, is the Qualified Person responsible for the design and
conduct of the work performed.
About KGHM
KGHM Polska Miedz S.A. is the ninth largest producer of copper
in the world, with annual production of over 500,000 tonnes
(approx. 2.7% of global production) and the world's third-largest
silver producer, with annual output of around 1,100 tonnes (approx.
7% of global production). A fully integrated producer of high
quality copper in cathodes, wire rods, oxygen-free copper and
silver-bearing copper rods and round billets, the KGHM Group
comprises over 30 companies encompassing mines, copper smelters,
ore enrichment plants and hydrotechnical facilities providing
auxiliary support for the core production business and
telecommunications. KGHM Group has been mining and processing
copper for almost 50 years and employs over 27,000 people. KGHM's
shares trade on the Warsaw Stock Exchange with a market
capitalization of over US$7 billion.
Forward-Looking Information
This release includes certain statements that may be deemed
"forward-looking statements". All statements in this release, other
than statements of historical facts, that address events or
developments that Abacus Mining and Exploration Corp. (the
"Company") expects to occur, are forward-looking statements.
Forward-looking statements are statements that are not historical
facts and are generally, but not always, identified by the words
"expects", "plans", "anticipates", "believes", "intends",
"estimates", "projects", "potential" and similar expressions, or
that events or conditions "will", "would", "may", "could" or
"should" occur. Although the Company believes the expectations
expressed in such forward-looking statements are based on
reasonable assumptions, such statements are not guarantees of
future performance and actual results may differ materially from
those in the forward-looking statements. Factors that could cause
the actual results to differ materially from those in
forward-looking statements include market prices, exploitation and
exploration successes, and continued availability of capital and
financing, and general economic, market or business conditions.
Investors are cautioned that any such statements are not guarantees
of future performance and actual results or developments may differ
materially from those projected in the forward-looking statements.
Forward-looking statements are based on the beliefs, estimates and
opinions of the Company's management on the date the statements are
made. The Company undertakes no obligation to update these
forward-looking statements in the event that management's beliefs,
estimates or opinions, or other factors, should change.
Neither 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.
Contacts: Abacus Mining & Exploration Corporation Donna
Yoshimatsu Director of Investor Relations 604-682-0301 604-682-0307
(FAX) dyoshimatsu@amemining.com Abacus Mining & Exploration
Corporation Tim Mikula Investor Relations 866-834-0301
tmikula@amemining.com www.amemining.com
Abacus Mining and Explor... (TSXV:AME)
Historical Stock Chart
From May 2024 to Jun 2024
Abacus Mining and Explor... (TSXV:AME)
Historical Stock Chart
From Jun 2023 to Jun 2024