Sherwood Raises US$37.5 Million From Minto Precious Metal Production
November 07 2008 - 10:00AM
Marketwired
Sherwood Copper Corporation (TSX VENTURE: SWC)(TSX VENTURE: SWC.DB)
today announced that it and its wholly owned subsidiaries, Minto
Explorations Ltd. ("MintoEx") and Kutcho Copper Corp. ("KCC"), have
entered into a letter of intent with Silverstone Resources Corp.
(TSX VENTURE: SST) whereby Silverstone will purchase, subject to
certain terms and conditions, all of the payable gold and silver
from the Minto Mine in the Yukon, over the life of the mine
starting December 1, 2008. Silverstone will make an upfront payment
of US$37.5 million in cash, one third of which is to be advanced
immediately following receipt of stock exchange acceptance and the
balance on execution of the formal agreement. Additional payments
will be paid against future production. Sherwood will use the
upfront payment to strengthen its balance sheet and that of its
subsidiary, MintoEx.
"Approximately 10% of the revenue from Sherwood's Minto Mine is
derived from by-product gold and silver contained in copper
concentrates. This transaction allows Sherwood to reduce leverage
by monetizing its precious metals stream at a time when precious
metals are trading well above those assumed in our feasibility
study," said Stephen Quin, President & CEO of Sherwood Copper.
"The objective of the transaction, which has been under discussion
for some time, is to strengthen our balance sheet and increase the
financial flexibility of Sherwood," he said. "Some of the benefit
to Silverstone from this transaction should flow back to Sherwood
on completion of the previously announced merger with Capstone
Mining, should it be approved, since Capstone owns approximately
22% of Silverstone."
Transaction Details
Silverstone will purchase all of the gold and silver production
from the Minto Mine and, in exchange, Sherwood will receive an
up-front payment from Silverstone of US$37.5 million, plus a
further payment of the lesser of (a) US$300 per ounce of gold and
US$3.90 per ounce of silver (subject to a 1% inflationary
adjustment after three years and each year thereafter) and (b) the
prevailing market price on the London Metal Exchange for each ounce
delivered. US$12.5 million of the upfront payment will be advanced
immediately following receipt of stock exchange acceptance and the
balance within 14 days of the date of the letter of intent, subject
to certain conditions. If production from the Minto Mine exceeds
50,000 oz of gold in the first two years of the agreement or 30,000
oz of gold per year thereafter, Silverstone will be entitled to
purchase only 50% of the amount in excess of those thresholds.
Kutcho Copper, Sherwood's wholly owned subsidiary that owns the
Kutcho copper-zinc-silver-gold project in British Columbia, has
also granted Silverstone a right of first refusal to purchase any
gold and/or silver streams from the Kutcho project, should Kutcho
Copper elect to sell such, on terms and conditions to be agreed by
mutual consent.
About Sherwood Copper
Sherwood Copper's objective is the profitable production of base
and precious metals from high grade, open pit mines in Canada.
Sherwood's first operating mine, the high grade Minto copper-gold
mine in Yukon, Canada, was built on budget and ahead of schedule.
The Minto Mine is one of the highest-grade open pit copper-gold
mines in the world, and is forecast to be a low cost producer.
Aggressive exploration on the Minto property has yielded
significant success, providing Sherwood the opportunity to 'grow
from within' by expanding the resource and reserve base,
potentially leading to further production increases. To further
accelerate its production growth, Sherwood intends to pursue merger
& acquisition opportunities that fit its business model and, in
May 2008, Sherwood acquired 100% ownership in Western Keltic Mines
(now Kutcho Copper Corp.), owner of the high-grade Kutcho
copper-zinc-gold-silver deposit in northwestern British Columbia.
Sherwood expects to lever off its successful development of the
Minto Mine and rapidly advance the Kutcho project to a production
decision. Sherwood has also agreed to combine with Capstone Mining,
subject to requisite shareholder and regulatory approvals, creating
a new low cost, growth oriented copper producer with two high grade
mines and a strong balance sheet.
Additional Information
Additional information on Sherwood and its Minto Mine can be
obtained on Sherwood's website at
http://www.sherwoodcopper.com.
On behalf of the board of directors
SHERWOOD COPPER CORPORATION
Stephen P. Quin, President & CEO
This document may contain "forward-looking statements" within
the meaning of Canadian securities legislation and the United
States Private Securities Litigation Reform Act of 1995. These
forward-looking statements are made as of the date of this document
and the Company does not intend, and does not assume any
obligation, to update these forward-looking statements.
Forward-looking statements relate to future events or future
performance and reflect management's expectations or beliefs
regarding future events and include, but are not limited to,
statements with respect to the estimation of mineral reserves and
resources, the realization of mineral reserve estimates, the timing
and amount of estimated future production, costs of production,
capital expenditures, success of mining operations, environmental
risks, unanticipated reclamation expenses, title disputes or claims
and limitations on insurance coverage. In certain cases,
forward-looking statements can be identified by the use of words
such as "plans", "expects" or "does not expect", "is expected",
"budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates" or "does not anticipate", or "believes", or
variations of such words and phrases or statements that certain
actions, events or results "may", "could", "would", "might" or
"will be taken", "occur" or "be achieved" or the negative of these
terms or comparable terminology. By their very nature
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Such
factors include, among others, risks related to actual results of
current exploration activities; changes in project parameters as
plans continue to be refined; future prices of resources; possible
variations in ore reserves, grade or recovery rates; accidents,
labour disputes and other risks of the mining industry; delays in
obtaining governmental approvals or financing or in the completion
of development or construction activities; as well as those factors
detailed from time to time in the Company's interim and annual
financial statements and management's discussion and analysis of
those statements, all of which are filed and available for review
on SEDAR at www.sedar.com. Although the Company has attempted to
identify important factors that could cause actual actions, events
or results to differ materially from those described in
forward-looking statements, there may be other factors that cause
actions, events or results not to be as anticipated, estimated or
intended. There can be no assurance that forward-looking statements
will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such
statements.
Accordingly, readers should not place undue reliance on
forward-looking statements.
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this press
release.
Contacts: Sherwood Copper Corporation Stephen P. Quin Investor
Contact (604) 687-7545 Sherwood Copper Corporation Chris Curran
Investor Contact (604) 687-7545 (604) 689-5041 (FAX) Website:
www.sherwoodcopper.com
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