VANCOUVER, June 17, 2011 /CNW/ - 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.
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
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
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
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 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
SOURCE Capstone Mining Corp.
For further information:
Capstone Mining Corp.
Cindy Burnett, VP Investor Relations