TORONTO, Aug. 14, 2012 /CNW/ - Liberty Mines Inc. ("Liberty" or the "Company") announced today that effective immediately it has temporarily suspended production activities due to a low nickel price environment, which has declined by more than 25% in the past six months. Liberty's decision is designed to preserve its nickel ore for when base metals prices improve, and production becomes economically viable.
"Clearly, we are disappointed that market conditions and commodities prices have not kept pace with Liberty's turnaround since the start of the year," said Chris Stewart, President and CEO of Liberty Mines. "Our decision to suspend production temporarily is not being taken lightly, but is ultimately in the best long-term interests of our investors and strategic partners. In the interim, we are making every effort to reduce costs and update our go-forward strategy."
The Company will move all of its assets into a care and maintenance mode effective immediately. This will enable Liberty to protect its assets, and keep them in a ready state so that viable production can easily be restarted when the price of nickel has recovered sufficiently.
To reduce short-term cash requirements, Liberty has also decided to temporarily suspend its exploration diamond drilling activities until further notice.
In response to adverse market conditions, Liberty has also announced that the offering of units of the Company contemplated under the preliminary short form prospectus dated June 26, 2012 is being withdrawn. The Company is reviewing its options for alternative financing arrangements as part of its updated strategy.
To address short term cash requirements, the Company has approached its primary shareholder, Jien International Investment Limited (JIIL), for additional financial support. JIIL has agreed to provide additional financial support to allow Liberty to continue as a going concern by making available an additional $5 million dollars between the date hereof and the end of the year. Interest on these funds will accrue at the rate of 10% per annum following receipt of the required regulatory approvals (including shareholder approval if applicable) and will be due on December 31, 2012. This additional advance will be secured as part of the existing security arrangements with JIIL and will be subject to standard covenants and events of default
Liberty also announced that it has been advised that its primary shareholder, JIIL, is re-evaluating the terms of the debt restructuring announced previously due to unfavorable market conditions and declining metals prices. The parties have agreed to enter into negotiations to complete a restructuring of all outstanding debt owed to JIIL prior to December 31, 2012. Liberty will keep shareholders apprised of new developments as negotiations are settled.
About Liberty Mines Inc.
Liberty Mines Inc. is a mid-tier producer of nickel and is focused on the exploration, development and production of nickel, copper, cobalt and platinum group metals from its properties in Ontario, Canada. It owns and operates the only nickel concentrator in the Shaw Dome, a prospective nickel belt region near Timmins, Ontario. With a new management team in place, Liberty is focused on growth initiatives not only through a more aggressive exploration program on its current properties but also through potential acquisition or partnership opportunities beyond its core Timmins area projects.
SOURCE: Liberty Mines Inc.
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