/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN
THE U.S./
TSX:SPM
VANCOUVER, May 6 /CNW/ - Scorpio Mining Corporation (the "Company")
(TSX: SPM) is pleased to announce that it has closed its previously announced
bought-deal financing (the "Financing"), led by Research Capital Corporation
(the "Underwriter"). As announced on April 9, 2008, the Company agreed to
issue unsecured subordinated convertible debentures (the "Debentures") in the
aggregate principal amount of $25,000,000, less (on a dollar-for-dollar basis)
the aggregate exercise price paid or payable in respect of the exercise of any
outstanding warrants of the Company prior to closing of the Financing.
After reflecting approximately $6,000,000 of warrants recently exercised,
the Financing was completed, by agreement with the Underwriter, at an
aggregate principal amount of $20,000,000 to various purchasers resident in
Canada, the United States of America and other jurisdictions. The Debentures
were issued at par, have a maturity date of March 5, 2011, and bear interest
at a rate of 7% per annum, payable semi-annually in arrears. The Debentures
will be convertible at any time prior to maturity at the option of the holders
into common shares of the Company at a conversion price of $1.55 per common
share, and will not be redeemable by the Company.
In connection with the Financing, the Company received a $10,000,000
short-term bridge loan (the "Bridge Loan") from an institutional investor. The
Bridge Loan was unsecured, repayable on demand, and accrued interest at a rate
of 7% per annum, compounded daily. In accordance with the terms of the Bridge
Loan, upon the closing of the Financing, the principal amount of the Bridge
Loan was repaid through the issuance to the Bridge Loan lender of $10,000,000
principal amount of the Debentures as part of the aggregate $20,000,000
principal amount of Debenture issued, and accrued interest was paid in cash.
"We are pleased to have realized gross proceeds from the Financing and
recent warrant exercises of approximately $26 million in a manner that has not
significantly increased Scorpio's fully diluted capital" stated Peter J.
Hawley, CEO. "This financing will provide us with the necessary working
capital to put the Nuestra Senora project into full production."
In consideration for its services in connection with the Financing, the
Underwriter received a fee of $750,000, and was reimbursed for certain of its
expenses. The net proceeds of the Financing will be used to fund the start-up
of the Company's Nuestra Senora project and for general corporate and
administrative purposes.
The Debentures and any common shares of the Company issued upon
conversion of the Debentures within four months of closing will be subject to
a four-month hold period from closing under applicable securities laws. The
common shares issuable on the conversion of the Debentures have been approved
for listing on the Toronto Stock Exchange.
The Debentures and any common shares issuable thereunder have not been
registered under the U.S. Securities Act of 1933, as amended, or any state
securities laws, and may not be offered or sold in the United States absent
registration or an exemption from the registration requirements. This press
release shall not constitute an offer to sell or the solicitation of an offer
to buy nor shall there be any sale of the securities in any jurisdiction in
which such offer, solicitation or sale would be unlawful.
ON BEHALF OF SCORPIO MINING CORPORATION
Peter J. Hawley
Chairman & CEO
This news release includes certain statements that may be deemed
"forward-looking statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and applicable Canadian securities
legislation. Forward-looking statements include, but are not limited to,
statements with respect to the future use of proceeds of the Financing, and
the start-up of the Nuestra Senora Project. Generally, these forward-looking
statements can be identified by the forward-looking terminology such as
"plans", "expects" or "does not expect", "is expected", "budget", "scheduled",
"estimates", "projects", "intends", "anticipates", or "does not anticipate",
or "believes", or variations of such words and phrases or state that certain
actions, events or results "may", "can", "could", "would", "might", or "will"
be taken", "occur" or "be achieved". Forward-looking statements are subject to
known and unknown risks, uncertainties and other factors that may cause the
actual results, level of activity, performance or achievements of Scorpio
Mining Corporation to be materially different from those expressed or implied
by such forward-looking statements, including but not limited to: risks
related to the exploration and potential development of the Nuestra Senora
Project, risks related to international operations, the actual results of
current exploration activities, conclusions of economic evaluations, changes
in project parametres as plans continue to be refined, future prices of
silver, zinc, copper, lead and gold, as well as those factors discussed in the
sections relating to risk factors of our business filed in Scorpio Mining
Corporation's required securities filings on SEDAR, including its Annual
Information Form date March 31, 2008. Although Scorpio Mining Corporation has
attempted to identify important factors that could cause results to differ
materially from those contained in forward-looking statements, there may be
other factors that cause results to be materially different from those
anticipated, described, estimated, assessed or intended.
There can be no assurance that any forward-looking statements will
provide 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 statements. Scorpio Mining Corporation
doses not undertake to update any forward-looking statements that are
incorporated by reference herein, except in accordance with applicable
securities laws.
For further information: Glenn Little, Jackson Little Holdings Ltd:
(604) 930-4375, 1-888-930-4375, Email: jlconsulting@telus.net; Rich Kaiser,
YES International: 1-800-631-8127, 001-757-306-6090 (outside North America),
Email: yes@yesinternational.com
