Capstone Completes Acquisition of Far West Mining and Transactions With Korea Resources CorporationBy Capstone Mining Corp., PRNE
Thursday, June 16, 2011
VANCOUVER, June 17, 2011 -
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
“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.
- 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
- 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
- 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
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
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.
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 href="www.capstonemining.com">www.capstonemining.com
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
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 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
Tags: canada, Capstone Mining Corp, June 17, Vancouver