NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Vancouver, B.C., August 20, 2014: American CuMo Mining Corporation (“CuMoCo” or the “Company”) (TSXV: MLY; OTCQX: MLYCF) is pleased to announce revised terms for its proposed US$25,000,000 financing (the “Idaho CuMo Financing”) involving the sale of up to 100 units (“Idaho CuMo Units”) of its subsidiary, Idaho CuMo Mining Corporation (“Idaho CuMo”) at a price of US$250,000 per Idaho CuMo Unit, with each Idaho CuMo Unit consisting of a non-transferable promissory note in the principal amount of US$250,000 (a “Note”) and a right (the “Silver Purchase Right”) to enter into a silver purchase and sale agreement (a “Silver Purchase Agreement”) with Idaho CuMo (see News Release dated December 18, 2013). The Notes would now be secured against the assets of Idaho CuMo (previously the Notes were to have been unsecured); bear interest at a rate of 8.5% per annum (previously 6.0%), payable semi-annually on June 30 and December 31; and have a term of 7 years. With the consent of the holder of the Note, Idaho CuMo could prepay all or any portion of the principal amount outstanding under such Note at any time, provided that any prepayment in whole or in part of the Note would cause the Silver Purchase Right to immediately expire.
The Silver Purchase Right would be exercisable by the holder within 30 days of completion of a feasibility study and decision by the Company to place its CuMo Project located in Idaho into commercial production provided that the Note had not been repaid in full or in part by the Company. Each Silver Purchase Right would, if exercised, require the purchaser to purchase and Idaho CuMo to sell to the purchaser refined silver in an amount equal to 0.5% of the silver (in any form) produced from the CuMo Project, up to a maximum of 375,000 ounces of refined silver (previously 312,500 ounces of refined silver) (the “Silver Maximum”) pursuant to a Silver Purchase Agreement.
If all Idaho CuMo Units under the Idaho CuMo Financing are issued and all Silver Purchase Rights were exercised, Idaho CuMo would be required to sell up to a maximum of 37,500,000 ounces of refined silver, which silver would be deliverable from 50% of the silver produced from the CuMo Project. Upon exercise of the Silver Purchase Right, the purchaser would pay an upfront cash payment of US$250,000 (the “Deposit”) per Silver Purchase Right exercised upon execution of the Silver Purchase Agreement, which payment would be made by way of a set off against repayment of the principal amount of loans owing by Idaho CuMo to the purchaser. The Deposit would be unsecured.
The purchase price for each ounce of refined silver purchased would be comprised of (a) an ongoing cash payment (“Ongoing Payment”), being the lesser of (i) the London silver spot price and (ii) US$5/oz, subject to an inflationary adjustment; and (b) a deposit reduction amount, being the amount by which the silver spot price exceeds the Ongoing Payment, paid as a reduction to the Deposit and payable until such time as the Deposit is reduced to zero.
The term of the Silver Purchase Agreements would continue until the earlier of (i) the date on which the Silver Maximum has been delivered to the purchaser; and (ii) 40 years (subject to automatic 10-year renewals if the CuMo Project is in operation). Any uncredited balance of the Deposit at the end of a Silver Purchase Agreement’s term would be refunded to the purchaser.
The Company hopes to close the Idaho CuMo Financing on or before October 15, 2014 and it is subject to the approval and consent of the TSX Venture Exchange and the preparation and approval by the parties of definitive legal documentation.
Proceeds from the Idaho CuMo Financing will be used to further develop the Company’s flagship asset, the CuMo Project, a large molybdenum, copper, and silver property located in Idaho, including: updating the resource calculation, updating the economic analysis, expanding metallurgical testing, conducting in-fill drilling and conducting environmental base-line studies, as well as for general working capital purposes and repaying the convertible notes issued to International Energy & Mineral Resources Investment (Hong Kong) Company Limited. Finder’s fees, in accordance with TSX policy, will be paid in connection with the Idaho CuMo Financing.
NON-BROKERED PRIVATE PLACEMENT
The Company also announces a concurrent non-brokered private placement of up to 10,000,000 units (“CuMoCo Units”) at a price of Cdn$0.05 per CuMoCo Unit for gross proceeds of up to $500,000 (the “CuMoCo Offering”), a portion of which will be applied to reduce the Company’s working capital deficit and the remainder for general corporate purposes. Each CuMoCo Unit will consist of one common share of the Company and one share purchase warrant (a “Warrant”) exercisable to purchase one common share of the Company at a price of Cdn$0.10 per common share for a period of two years from the date of issue, subject to an acceleration provision whereby the term of the Warrants may be accelerated in the event that the Company’s common shares trade at or above a price of Cdn$0.12 per share for a period of 10 consecutive trading days. In such case, the Company may give notice to the holders of Warrants that the Warrants will expire 20 days from the date of providing such notice.
The CuMoCo Offering shall include two parts: a private placement to existing shareholders of CuMoCo (the “Existing Shareholder Private Placement”) under a new prospectus exemption process as set out in British Columbia Instrument 45-534 (and in similar instruments in other provinces of Canada except for Ontario and Newfoundland and Labrador) and a non-brokered private placement to all other eligible investors in accordance with applicable TSX Venture Exchange rules and securities laws (the “Concurrent Offering”).
Existing shareholders of CuMoCo are encouraged to participate in the proposed Existing Shareholder Private Placement and are invited to contact CuMoCo by email at firstname.lastname@example.org or by telephone at +1 (604) 689-7902, for additional information. Only CuMoCo shareholders who, as of the close of business on August 20 , 2014, held common shares of CuMoCo and continue to hold common shares at the time of closing may participate in the Existing Shareholder Private Placement. Unless the CuMoCo shareholder is a person that has obtained advice regarding the suitability of the investment and, if such shareholder is resident in a jurisdiction of Canada, that advice has been obtained from a person that is registered as an investment dealer in such jurisdiction, the aggregate subscription cost to such shareholder for the CuMoCo Units subscribed under the Existing Shareholder Private Placement cannot exceed $15,000 (300,000 CuMoCo Units). Existing shareholders who are residents of the Provinces of Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island, Québec, Saskatchewan, Yukon, Northwest Territories and Nunavut may participate in the Existing Shareholder Private Placement and existing shareholders resident in countries other than Canada may need to meet the applicable eligibility requirements, if any, in their jurisdiction of residence to participate. Shareholders resident in Ontario and Newfoundland and Labrador are not permitted to participate in the Existing Shareholder Private Placement.
The maximum offering under the Existing Shareholder Private Placement shall be the balance of the Offering not sold through the Concurrent Offering to institutional and eligible accredited investors and no minimum number of CuMoCo Units and minimum dollar amount raised has been set. If the aggregate subscriptions for CuMoCo Units under the Existing Shareholder Private Placement exceed the maximum number of CuMoCo Units proposed to be distributed, subscriptions will be accepted on a first come, first served basis such that it is possible that a subscription received from a shareholder may not be accepted by the Company if the CuMoCo Offering is over-subscribed, The Board of Directors will decide on whether or not to increase the size of the placement to accommodate the over subscription. The terms and completion of the CuMoCo Offering are subject to TSX Venture Exchange approval.
The securities offered pursuant to the Idaho CuMo Financing and the CuMoCo Offering have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any United States state securities laws, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or any applicable exemption from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. This press release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
UPDATE ON CUMO PROJECT
The Company announces that the Supplemental Environmental Assessment (the “SEA”) being prepared in respect of the CuMo project is nearing completion, which will enable the Company to complete its exploration program. The US Forest Service (the “USFS”) has been meticulously responding to public comments received on the draft version. A key element of the SEA is assurance by the Idaho Department of Environmental Quality (the “DEQ”) that exploration will not adversely impact water quality. CuMoCo has agreed to collect and analyze water samples before and after drilling to help the agency monitor impacts, if any, and DEQ has withdrawn its previous concerns. The USFS is adding a section to the SEA that addresses the impacts of recent lightning-caused wildfires on approximately 20% of the project site. The Company looks forward to receiving the final report.
Mr. Shaun M. Dykes, M.Sc. (Eng), P.Geo., President and CEO of the Company is the designated qualified person for the CuMo Project, and prepared the technical information contained in this news release.
CuMoCo is focused on advancing its CuMo Project towards feasibility and establishing itself as one of the largest and lowest-cost molybdenum producers in the world as well as a significant producer of copper and silver. Management is continuing to build a strong foundation from which to move the Company and the CuMo Project forward. For more information, please visit www.cumoco.com and www.cumoproject.com
American CuMo Mining Corporation
American CuMo Mining Corporation
Tel: (604) 689-7902
Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this new release.
This news release contains “forward-looking information” within the meaning of applicable Canadian securities legislation including, but not limited to, statements that address activities, events or developments that the Company expects or anticipates will or may occur in the future, such the Company’s ability to move its CuMo Project to feasibility and production, and to become one of the largest and lowest-cost molybdenum producers in the world as well as a significant producer of copper and silver. Forward-looking information is based on a number of material factors and assumptions, including the result of exploration activities, the ability of the Company to raise the financing for a feasibility study and to put the CuMo project into production, that no labour shortages or delays are experienced, that plant and equipment function as specified that the Court will not intervene with the Company’s proposed exploration activities at the CuMo Project, and the ability of the Company to obtain all requisite permits and licenses to advance the CuMo Project and eventually bring it into production. Forward-looking information involves known and unknown risks, future events, conditions, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future prediction, projection or forecast expressed or implied by the forward-looking information. Such factors include, among others, the interpretation and actual results of current exploration activities; changes in project parameters as plans continue to be refined; future prices of molybdenum, silver and copper; possible variations in grade or recovery rates; labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing, as well as those factors disclosed in the Company’s publicly filed documents, including the Company’s Management’s Discussion and Analysis for the period ended September 30, 2013. 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 information 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 information. Except as required under applicable securities legislation, the Company undertakes no obligation to publicly update or revise forward-looking information.