Capstone Completes Acquisition of Far West Mining and Transactions With Korea Resources Corporation
VANCOUVER, June 17, 2011 /PRNewswire/ --
Capstone Mining Corp. ('Capstone' or the 'Company') (TSX: CS) has
completed the previously announced arrangement (the 'Arrangement') with Far
West Mining Ltd. ('Far West') (formerly TSX: FWM) pursuant to which Capstone
has acquired all of the issued and outstanding common shares of Far West.
Far West is now held through a newly-formed subsidiary of Capstone, owned
70% by Capstone and 30% by Korea Resources Corporation ('KORES').
Capstone has also formed a long-term strategic partnership with KORES
for the development of the Santo Domingo project. Concurrent with the
completion of the Arrangement, KORES (through affiliated companies) (i)
acquired a 30% interest in the entity that owns the Santo Domingo project
for cash consideration of approximately C$195 million to Capstone, and (ii)
subscribed for approximately 40.2 million common shares of Capstone,
representing an approximate 11% interest in Capstone, at a price of C$4.35
per share, for aggregate cash consideration of approximately C$175 million.
'We are extremely excited about the prospects for the new Capstone,'
said Darren Pylot, President and CEO of Capstone. 'The acquisition of the
Santo Domingo asset in Chile and agreement with KORES give us the
opportunity to more than double our copper production in 2015. The
development of Santo Domingo is fully funded, allowing us to advance the
project rapidly to production.'
'The existing cash flow from our two operating copper mines, combined
with the growth opportunity afforded by the Santo Domingo project, provide
us with an excellent growth platform, consistent with our strategy,'
continued Mr. Pylot.
Transaction Highlights
- Robust cash flow generation in a company with a strong
balance sheet and a strategic partnership with KORES to fund a leading
copper production growth profile. Estimated cash on hand at the close of
the transaction is approximately US$485 million.
- Transaction delivers fully-funded growth to Capstone from Santo
Domingo.
- Santo Domingo is favourably located with access to nearby
infrastructure, and ongoing studies continue to demonstrate the
potential for significant copper and iron ore production.
- Consistent with Capstone's strategy of building a mid-tier
copper producer focused in the Americas forming a combined portfolio of
high quality operating mines and a strong pipeline of copper production
growth in mining friendly jurisdictions.
- 200% growth in anticipated copper production from 2011 to 2016
and over 125% increase in measured and indicated copper contained in
mineral resources to Capstone from its 70% share.
- Further asset diversification in a preferred mining geography.
- No future share dilution to fund Santo Domingo as Capstone
expects to fund its portion of Santo Domingo capital requirements
through balance sheet and ongoing cash flow from operations.
Exchange of Far West Shares
Far West Shareholders who elected to receive, in exchange for each Far
West Share held, either:
Option (i) 1.825 Capstone Shares and C$1.00 in cash (the 'Full Proration
Alternative'); or Option (ii) 2.047 Capstone Shares and C$0.001 in cash (the
'Share Alternative');
will receive the Full Proration Alternative or Share Alternative, as the
case may be.
The all cash alternative (the 'Cash Alternative') was oversubscribed and
subject to proration. Far West Shareholders who elected to receive, in
exchange for each Far West Share held:
Option (iii) C$9.19 in cash;
will receive C$1.10 in cash and 1.802 Capstone shares.
In exchange for any Far West Shares for which no election was made by
the election deadline of June 9, 2011, those Far West Shareholders are
deemed to have elected to receive the Full Proration Alternative as
described above.
About Capstone Mining Corp.
Capstone Mining Corp. is a TSX listed Canadian mining company with two
producing copper mines in the Americas: the Cozamin copper-silver-zinc-lead
mine located in Zacatecas State, Mexico and the Minto copper-gold-silver
mine in Yukon, Canada.
Using its operations as a springboard, Capstone aims to grow organically
and through acquisitions in politically stable, mining-friendly
jurisdictions, with a focus in the Americas: organic growth through
continued mineral resource and reserve expansions as well as expanding
operations at its operating mines, development of its large 70% owned Santo
Domingo copper-iron-gold project in Chile in partnership with Korea
Resources Corporation, development of its Kutcho copper-zinc-gold-silver
project in British Columbia and exploration at properties in Chile, British
Columbia and Australia. Capstone's cash flow and strong balance sheet
provide the platform to enhance that growth profile. Capstone is included in
the S&P/TSX Composite Index and S&P/TSX Global Mining Index. Additional
information is available at http://www.capstonemining.com.
Forward-Looking Statements
This document may contain 'forward-looking information' within the
meaning of Canadian securities legislation and 'forward-looking statements'
within the meaning of the United States Private Securities Litigation Reform
Act of 1995 (collectively, 'forward-looking statements'). These
forward-looking statements are made as of the date of this document.
Forward-looking statements relate to future events or future performance
and reflect Capstone management's expectations or beliefs regarding future
events and include, but are not limited to, statements with respect to the
implementation of the proposed transactions and the integration of Capstone
and Far West. Assumptions upon which such forward-looking statements are
based include, but are not limited to, statements with respect to the
integration of Capstone and Far West following the transaction, estimation
of mineral reserves and mineral resources, availability of cash flow to fund
capital requirements, the timing and amount of estimated future production,
availability of project financing, and success of mining and development
operations. Many of these assumptions are based on factors and events that
are not within the control of Capstone and there is no assurance they will
prove to be correct.
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', 'potential', '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 Capstone 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 and development activities;
changes in project parameters as plans continue to be refined; future prices
of metals; possible variations in mineral 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 Capstone'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 http://www.sedar.com. Although
Capstone 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. Capstone
provides 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.
For further information:
Capstone Mining Corp.
Cindy Burnett, VP Investor Relations
Telephone: 1-604-637-8157
Email: cburnett@capstonemining.com
Website: http://www.capstonemining.com
(CS.)
Capstone Mining Corp.
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