Sherwood Copper Corporation (TSX VENTURE: SWC)(TSX VENTURE: SWC.DB)
and Capstone Mining Corp. (TSX: CS) are pleased to announce that
the previously announced business combination, by way of Plan of
Arrangement (the "Arrangement"), was approved by the Supreme Court
of British Columbia on November 21, 2008 and closed effective as of
6:00 AM (Vancouver time) earlier today. Sherwood's shares have
ceased trading, effective the closing time of 6:00 AM.
"The completion of the business combination between Capstone
Mining and Sherwood Copper creates the new Capstone Mining Corp.; a
high grade, low cost, growth oriented intermediate copper producer
with a strong balance sheet and robust cash flow supported by
significant in-the-money copper forward sales," said Darren Pylot,
President & CEO of Capstone Mining. "I look forward to working
together with the new board of directors and management team to
continue growing the new company via organic and outside
opportunities."
"Sherwood's Minto mine and Capstone's Cozamin mine are both low
cost, high grade operations that have undergone a period of rapid
resource expansion and production increases over the past two
years," said Stephen Quin, President & CEO of Sherwood Copper.
"The benefits of these expansions, including both resources and
copper output, should be evident in 2009 as resource estimates are
updated and the full production capacity of each mine is realized.
We now look forward to focusing on maximizing output and minimizing
costs for both operations, while continuing to take advantage of
value opportunities internally and externally."
Combined Company Highlights
Capstone Mining, now that it has completed the Arrangement with
Sherwood Copper, has the following attributes
1. High grade, low cost copper production from two mining
operations, Minto and Cozamin;
2. Significant by-product production of gold and silver from
Minto and silver, zinc and lead from Cozamin;
3. Operations all in North America, in mining friendly
jurisdictions: Minto in the Yukon, Canada and Cozamin in Zacatecas,
Mexico;
4. Cash flow engine supported by robust hedge book, with the
combined companies having sold forward approximately 122.5 million
pounds of copper at an average price of US$2.56 per pound, as at
September 30, 2008;
5. Track record of growing resources and production with Phase
III production expansions recently completed at Minto (to 3,200
tpd) and Cozamin (to 3,000 tpd) and now being commissioned;
6. Successful exploration programs at Minto and Cozamin in 2007
and 2008 that should result in significant resource to reserve
conversion and, in the case of Minto, additional increases in
resources that could support further production expansions;
7. Additional high grade copper development project at Kutcho,
with significant silver, gold and zinc by-products, where drilling
completed in 2008 is expected to support the definition of smaller,
higher grade project with enhanced economics;
8. Strong balance sheet, further enhanced following the recently
completed life-of-mine precious metal transaction with Silverstone
Resource Corp.;
9. Continued exposure to precious metals through a 22%
shareholding in Silverstone; and
10. Strong management team with a proven ability to acquire,
develop projects on plan and on budget and operate effectively and
efficiently.
Transaction Summary
Pursuant to the Arrangement, holders of Sherwood shares are
entitled to receive 1.566 Capstone shares for every one Sherwood
share held. Outstanding options and warrants of Sherwood are to be
adjusted in accordance with their terms so that the number of
Capstone shares received upon exercise and the exercise price are
adjusted proportionately to reflect the same exchange ratio.
Sherwood and a wholly-owned subsidiary of Capstone have been
amalgamated under the name "Capstone Mining North Ltd." and the
amalgamated company is a wholly-owned subsidiary of Capstone.
Additional information on the transaction is available in the
Information Circular available on SEDAR at www.sedar.com.
Sherwood Shares to be Delisted
Sherwood's shares will be delisted from the TSX Venture Exchange
on or about November 25, 2008. Sherwood shareholders have received
a letter of transmittal providing instructions on how to exchange
their share certificates pursuant to the Arrangement. Sherwood
shareholders can also find a copy of the letter of transmittal on
SEDAR at www.sedar.com.
Board & Management of Capstone
As a result of the closing of the Arrangement, Capstone now owns
100% of Sherwood's Minto copper-gold mine in Yukon, Canada and high
grade Kutcho copper-zinc project in BC, Canada. The board of
directors of Capstone now consists of six directors, being Colin K.
Benner (Chairman), Darren Pylot (Vice Chairman), Stephen Quin,
Bruce McLeod, John Wright and Lawrence Bell. Colin K. Benner,
Stephen Quin, Bruce McLeod and Lawrence Bell are former directors
of Sherwood. Darren Pylot becomes Vice Chairman and CEO, Stephen
Quin becomes President and COO, and Richard Godfrey CFO of
Capstone.
Convertible Debentures
In accordance with the terms of the Indenture, Capstone will be
making an offer to purchase (the "Offer to Purchase") all
outstanding Debentures (as defined below) within 30 days after
November 24, 2008, being the effective date of the Arrangement, at
a purchase price per $1,000 principal amount of the Debentures
equal to the aggregate of (i) 101% of the principal amount of the
Debentures and (ii) all accrued and unpaid interest thereon up to
but excluding the date of payment specified in the Offer to
Purchase, all in accordance with the Indenture.
In connection with the closing of the Arrangement Capstone,
Capstone North and Computershare Trust Company of Canada
("Computershare") have entered into an indenture (the "First
Supplemental Indenture") supplemental to the trust indenture made
as of February 28, 2007 (the "Original Indenture") between Sherwood
and Computershare, which indenture contains the terms and
conditions governing the outstanding convertible unsecured
subordinated debentures of Sherwood with the designation of "5%
Convertible Unsecured Subordinated Debentures due March 31, 2012"
(the "Debentures"). The First Supplemental Indenture, among other
things, (a) contains an agreement by Capstone to assume the
obligations of Sherwood under the Debentures and the Original
Indenture and (b) sets forth the adjustment in respect of the
Debentures to give effect to the relevant adjustment provisions of
the Original Indenture. Copies of the Original Indenture and the
First Supplemental Indenture (collectively, the "Indenture") are
available on SEDAR at www.sedar.com under the companies' respective
profiles.
The Debentures will be delisted from the TSX Venture Exchange in
due course and listed as securities of Capstone on the Toronto
Stock Exchange under the symbol "CS.DB".
The New Capstone
With Sherwood and Capstone now combined, Capstone Mining will be
a well-funded, low-cost, growth-oriented, intermediate copper
company with two producing high grade copper mines in mining
friendly jurisdictions in North America. Following extensive
in-fill and step out drilling at both the Cozamin and Minto mines,
new resource estimates are being compiled and are expected to
result in increased reserves, support longer mine lives and, in the
case of Minto, further potential increases in mill capacity. In
addition, the high grade Kutcho copper project continues to be
redesigned as a smaller, higher grade project following significant
improvements in the continuity of the high grade mineralization
realized in 2008.
Combined, the existing operations' production levels, coupled
with their expansion potential, the potential of the Kutcho
project, a strong hedge book and recently enhanced balance sheet
create an attractive base metal production entity. The new company
has a platform for organic growth and is well positioned to take
advantage of external growth opportunities and lever off of its
mine building, operating, financing, exploration and project
management teams.
Forward-Looking Statements
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 Capstone Mining Corp. and Sherwood Copper Corporation
(hereinafter referred to as the "Companies") do not intend, and do
not assume any obligation, to update these forward-looking
statements.
Forward-looking statements relate to future events or future
performance and reflect management of the Companies' 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 Companies 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 Companies' 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 Companies have 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.
Neither the TSX Venture Exchange nor the TSX any accept
responsibility for the adequacy or accuracy of this press
release.
Contacts: Capstone Mining Corp. Darren Pylot Vice Chairman &
CEO (604) 684-8894 or 1-866-684-8894 Capstone Mining Corp. Chris
Tomanik (604) 684-8894 or 1-866-684-8894 Capstone Mining Corp. Mark
Patchett (604) 684-8894 or 1-866-684-8894 (604) 688-2180 (FAX)
Email: info@capstonemining.com Sherwood Copper Corporation Stephen
Quin President & COO (604) 687-7545 or 1-888-338-2200 Sherwood
Copper Corporation Chris Curran (604) 687-7545 or 1-888-338-2200
(604) 689-5041 (FAX) Email: info@sherwoodcopper.com Website:
www.sherwoodcopper.com
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