TORONTO, July 29 /CNW/ - Mandalay Resources Corporation (TSX: MND) ("Mandalay" or the "Company") is pleased to announce that it has filed a final short form prospectus with the securities regulatory authorities in each of the provinces of Canada, except Québec, in connection with a fully marketed offering (the "Offering") to issue 82,142,857 subscription receipts (the "Subscription Receipts") at a price of $0.28 per Subscription Receipt for aggregate gross proceeds of $23 million on a best efforts basis with a syndicate of agents co-led by GMP Securities L.P. and BMO Capital Markets (the "Agents"). Once the Release Conditions (as defined below) have been satisfied, each Subscription Receipt will be automatically exchanged, without payment of any additional consideration and subject to adjustment, for one unit (each a "Unit") comprised of one common share of the Company (each a "Unit Share") and one common share purchase warrant (each a "Warrant"). Each Warrant will be exchangeable into one common share of the Company (each a "Warrant Share") at a price of $0.33 for a period of 24 months.
Upon the exchange of the Subscription Receipts for Units, the Agents will be paid a commission equal to 5% of the gross proceeds received by the Company from the Offering or $1.15 million. Of this amount, $100,000 will be paid in cash, and the balance will be paid by Mandalay issuing 3,750,000 Units to the Agents at a price of $0.28.
The Offering follows the signing of a purchase agreement with Coeur d'Alene Mines Corporation ("Coeur") pursuant to which the Company agreed to purchase (the "Acquisition") Coeur's wholly-owned subsidiary Compania Minera Cerro Bayo Ltda. ("Minera Cerro Bayo"). Please refer to the Company's press release dated May 4, 2010 for further details. The principal asset of Minera Cerro Bayo is the Cerro Bayo silver-gold mine in Patagonia, Chile, currently on care and maintenance. The Offering and the Acquisition are expected to close on or about August 6, 2010.
Brad Mills, CEO of Mandalay said, "We are pleased to have filed our final prospectus for the financing in connection with our acquisition and restart of the Cerro Bayo mine. Following the completion of the transaction, the Company plans to immediately restart mining operations at Cerro Bayo and commence exploration drilling to extend the reserve life of the operation. We expect initial commercial production to be achieved in the first quarter of 2011, building up to an annualized production rate of approximately 25,000 ounces of gold and 3 million ounces of silver per year by the end of 2011."
The gross proceeds of the Offering, less an amount equal to the expenses of the Agents in connection with the Offering (the "Escrowed Funds"), will be held in escrow and released to the Company when the release conditions in connection with the Offering (the "Release Conditions") have been satisfied. If the Release Conditions are not satisfied on or before 5:00 p.m. (EDT) on August 15, 2010, holders of Subscription Receipts will be entitled to a full refund of the subscription price for their Subscription Receipts.
The Release Conditions include the satisfaction of the conditions precedent contained in the purchase agreement dated May 1, 2010 between the Company and Coeur (available under the profile of the Company at www.sedar.com), and the receipt by the Company of the conditional approval of the Toronto Stock Exchange (the "TSX") of the Offering and the listing of the underlying Unit Shares and Warrants and the Warrant Shares. The Company has received the conditional approval of the listing of the Unit Shares and Warrants and the Warrant Shares from the TSX.
The proceeds from the Offering will be used to fund the purchase price of Minera Cerro Bayo, Cerro Bayo mine development, exploration and plant improvements, as well as general working capital. The final short form prospectus is available on SEDAR under Mandalay's profile at www.sedar.com.
About Mandalay Resources Corporation:
Mandalay Resources is a Canadian-based natural resource company with producing assets in Australia and exploration projects in Chile. The Company is focused on executing a roll-up strategy, creating critical mass by aggregating advanced or in-production gold, copper, silver and antimony projects in Australia and the Americas to generate near-term cash flow and shareholder value.
The securities described herein 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 state securities laws, and accordingly, may not be offered or sold within the United States except in compliance with the registration requirements of the U.S. Securities Act and applicable state securities requirements or pursuant to exemptions therefrom. This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the Company's securities in the United States.
This news release contains "forward-looking statements" within the meaning of applicable securities laws. Readers are cautioned not to place undue reliance on forward-looking statements. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, Mandalay's ability to complete the proposed financing, changes in commodity prices and general market and economic conditions. The factors identified above are not intended to represent a complete list of the factors that could affect Mandalay. In addition, there can be no assurance that any inferred resources that are discovered as a result of additional drilling will ever be upgraded to proven or probable reserves. Although Mandalay 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. There can be 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 statements.
SOURCE Mandalay Resources Corporation
For further information: For further information: Bradford Mills, Chief Executive Officer, Greg DiTomaso, Investor Relations, Contact: 647.260.1566, Email: email@example.com, Company website: www.mandalayresources.com