VANCOUVER, British Columbia,
June 3, 2019 /CNW/ - Capstone Mining
Corp. ("Capstone") (TSX:CS) announced it has entered into a
definitive share purchase agreement (the "Agreement") to sell its
100% interest in the Minto mine
("Minto" or the "Mine") to
Pembridge Resources PLC ("Pembridge") (LON:PERE) (the
"Transaction"). Under the terms of the Agreement, Capstone will
receive up to US$20 million in cash
(the "Purchase Price"), in staged payments. The Transaction closed
simultaneously with the signing of the Agreement and is effective
immediately.
"The sale of the Minto mine is
very good news all around. Capstone will no longer incur the
expense of having the mine on care and maintenance, and the
recommencement of operations will be positive for Minto employees, contractors and the local
economy," said Darren Pylot,
President & CEO of Capstone. "Completing Minto's divestiture
allows Capstone's management to focus on our core operations, which
includes completing the strategic process for Santo Domingo."
The Transaction requires Pembridge to pay Capstone as
follows:
- US$5 million within 60 days of
reaching commercial production;
- US$5 million within 90 days,
following two consecutive quarters of commercial production in
which the average London Metals Exchange Cash Copper Bid Price
("Average LME Price") is greater than US$3.00 per pound within the three years
following commercial production; and
- US$10 million, within 90 days
following two consecutive quarters of commercial production in
which the Average LME Price is greater than US$3.50 per pound within the three years
following commercial production.
As a result of the Transaction, Capstone will derecognize an
approximate US$24 million asset
retirement obligation in its financial statements this quarter; and
will recognize an accounting charge of approximately US$20 million to US$30
million due primarily to the reversal of non-cash,
cumulative translation adjustments related to foreign exchange at
Minto which currently reside in
equity. In conjunction with closing, Pembridge has posted a surety
bond to cover potential future reclamation liabilities. In
addition, Pembridge will be required to post C$10 million in cash collateral over time against
the bond and conduct prescribed progressive reclamation activities
to reduce the overall future closure cost. While this surety
bond is outstanding, Capstone will act as an indemnitor to the
surety bond provider and for certain other obligations, and
Pembridge will indemnify Capstone for environmental liabilities at
the Mine.
Proceeds from the sale of Minto
will be used to reduce outstanding debt under Capstone's revolving
credit facility.
About Capstone Mining Corp.
Capstone Mining Corp.
is a Canadian base metals mining company, focused on copper. Our
two producing mines are the Pinto Valley copper mine located in
Arizona, US and the Cozamin
polymetallic mine in Zacatecas State, Mexico. In addition, Capstone has the large
scale 70% owned copper-iron Santo
Domingo development project in Region III, Chile, in partnership with Korea Resources
Corporation, as well as a portfolio of exploration properties.
Capstone's strategy is to focus on the optimization of operations
and assets in politically stable, mining-friendly regions, centred
in the Americas. We are committed to the responsible development of
our assets and the environments in which we operate. Our
headquarters are in Vancouver,
Canada and we are listed on the Toronto Stock Exchange
(TSX). Further information is available at
www.capstonemining.com.
Cautionary Note Regarding Forward-Looking Information
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 and Capstone does not intend,
and does not assume any obligation, to update these forward-looking
statements, except as required under applicable securities
legislation.
Forward-looking statements relate to future events or future
performance and reflect our expectations or beliefs regarding
future events. Forward-looking statements include, but are not
limited to, statements with respect to the timing and anticipated
staged payments for the sale of Minto and the accounting treatment thereof. In
certain cases, forward-looking statements can be identified by the
use of words such as "plans", "expects", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates", "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. In this document certain
forward-looking statements are identified by words including
"future reclamation liabilities", "future closure cost" and
"outstanding". By their very nature, forward-looking statements
involve known and unknown risks, uncertainties and other factors
that may cause our actual results, performance or achievements to
be materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements. Such factors include, amongst others, risks related to
inherent hazards associated with the operation and closure of
mining projects, future prices of copper and other metals, changes
in general economic conditions, and other risks of the mining
industry 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 under the Company's profile on SEDAR at
www.sedar.com. Although the Company has attempted to identify
important factors that could cause our actual results, performance
or achievements to differ materially from those described in our
forward-looking statements, there may be other factors that cause
our results, performance or achievements not to be as anticipated,
estimated or intended. There can be no assurance that our
forward-looking statements will prove to be accurate, as our actual
results, performance or achievements could differ materially from
those anticipated in such statements. Accordingly, readers should
not place undue reliance on our forward-looking statements.
Paul Jones, VP, Business
Development and Investor Relations, 604-674-0891,
pjones@capstonemining.com
