Kinbauri Signs Definitive Agreement With Glen Eagle Enabling Accelerated Development at El Valle/Carles
13 May 2009 - 12:40PM
Marketwired
Kinbauri Gold Corp. ("Kinbauri") (TSX VENTURE: KNB)(FRANKFURT:
3KG.DE) is pleased to announce that it has signed a definitive
subscription agreement with Glen Eagle Resources Inc. ("Glen
Eagle") (TSX VENTURE: GER) pursuant to the binding letter of intent
as announced on April 17, 2009. Under the terms of the subscription
agreement, Glen Eagle will invest C$32M to acquire a 45% interest
in Kinbauri Espana S.L. ("Espana"), which holds a 100% interest in
the El Valle/ Carles gold/copper project (the "Project") and other
exploitation concessions within the Rio Narcea Gold Belt in
Northwestern Spain. The initial investment of C$32M will be
allocated as to EUR3,068,850 to purchase class B voting
participations of Espana and the balance will be advanced as a
non-recourse shareholder loan to be paid back in accordance with
the shareholders' agreement to be entered into by the parties. All
disbursements of cash or kind will be strictly according to
participating interest whether by dividend or loan repayment. The
subscription agreement also grants Glen Eagle the right to acquire
a further 5% interest for an additional C$5M, to be allocated as to
EUR673,650 to purchase class B voting participations with the
balance being advanced as a loan on the same terms as the initial
loan. The subscription agreement does not contain a break fee. Due
to the registration process in Spain, the transaction is
anticipated to close on or about May 29, 2009, and is subject to
all necessary regulatory approvals. Kinbauri and Glen Eagle have
received conditional approval from the TSX Venture Exchange. M
Partners Inc. is acting as financial advisor to Kinbauri.
In addition to the subscription agreement, Kinbauri, Espana and
Glen Eagle will enter into a shareholders' agreement on closing of
the transaction. Under the terms of the shareholders' agreement,
Espana will have a board of directors consisting of five nominees,
three to be appointed by Kinbauri and two to be appointed by Glen
Eagle. In addition, a management committee of Espana comprised of
five nominees will be established to approve annual budgets with
respect to the Project, with three nominees appointed by Kinbauri
and two nominees appointed by Glen Eagle. The shareholders'
agreement also contains a provision for the dilution of a
non-participating shareholders' interest and upon either parties'
interest being diluted under 10%, it will be converted into a 2.5%
net smelter return royalty. Distributions will be determined by the
directors of Espana, declared quarterly and paid to each
shareholder strictly in accordance to their participating interest.
Either party has the ability to take their distribution in
production from the Project. In addition, either party has the
option to purchase production from the Project on standard
commercial terms.
Kinbauri will be the operator of the Project under the terms of
an operator agreement to be entered into on closing of the
transaction.
Further to Kinbauri's press release of May 11, 2009, "Responds
to Proposed Hostile Takeover", the company wishes to add the
following information.
- Since receipt of the Scott Wilson Roscoe Postle Associates
Scoping Study (the "Scoping Study") Kinbauri's engineers have been
working diligently to improve the mine plan and move production
forward. The revised mine plan resulted in a significant reduction
in pre-production capex, quicker access to high grade zones and
moved production forward to the second quarter of 2010.
- Kinbauri has engaged an independent mining consultant to
review and comment on the viability of the up-dated mine plan and
associated costs, cash flow projections and production schedule.
This will be completed prior to May 22, 2009.
- Kinbauri's on-site management team is headed by Mr. Jean
Bailly with over 35 years experience in mine management and
development, project valuation, cost control and employee
relations.
- Kinbauri has retained key personnel from Rio Narcea Gold Mine
S.L., all with extensive experience at the Project.
- Mining will be by independent contractors with extensive
underground and production experience.
- The company has developed extremely good relationships with
local and regional governments. The mine will employ approximately
200 people and will be welcome in an area which has high
unemployment.
- Under the new mine plan, further funding beyond that being
provided by Glen Eagle will be minimal. Discussions with financial
institutions indicate that project financing at that stage could be
obtained under favorable terms.
This press release has been prepared by Dr. V. N. Rampton, P.
Eng., in his capacity as a qualified person under the guidelines of
N.I. 43-101.
About Kinbauri:
Kinbauri is a TSXV - Tier 1 Mineral Exploration Company focused
on the development of precious metal prospects in Spain, Nevada and
Canada. Its immediate focus is to begin operations at its El
Valle/Carles property in Asturias, northwestern Spain by 2010. It
has 53,243,051 common shares issued and outstanding.
THIS PRESS RELEASE WAS PREPARED BY KINBAURI GOLD CORP. THE TSX
VENTURE EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR
ACCURACY OF THIS RELEASE.
This press release contains certain forward-looking statements,
which are based on the opinions and estimates of management at the
date the statements are made, and are subject to a variety of risks
and uncertainties and other factors that could cause actual events
or results to differ materially from those projected. Kinbauri
undertakes no obligation to update forward-looking statements if
circumstances or management's estimates or opinions should change.
The reader is cautioned not to place undue reliance on
forward-looking statements.
OR VISIT:
Kinbauri Gold's Hub at http://www.agoracom.com/IR/kinbauri where
investors can post questions and receive answers or review
questions and answers already posted by other investors. Kinbauri
Web-Site: www.kinbauri-gold.com.
Contacts: Kinbauri Gold Corp. Darrell Munro, BB.A, LL.B Manager,
Corporate Communications 613-836-0198 dmunro@kinbauri-gold.com
Kinbauri Gold Corp. Dr. Vern Rampton, P. Eng President 613-836-2594
613-831-2730 (FAX) vrampton@kinbauri-gold.com
kinbauri@kinbauri-gold.com Kinbauri Gold Corp. Brian McEwen, P
Geol. Director 604-551-6979 bmcewen@kinbauri-gold.com
www.kinbauri-gold.com Europe: INVESTEL Ruediger (Rudy) Hnyk, CEO
Investor Relations & Telecommunications ceo@investel.de
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