NWM Mining Corporation and GFM Minera and Global Resource Fund enter into Arrangement Agreement


TORONTO, June 8, 2015 /CNW/ - NWM Mining Corporation ("NWM" or the "Company") (TSX-V:NWM) announces that the Company has entered into a definitive arrangement agreement (the "Arrangement Agreement") with GFM Minera S.A.P.I. de C.V. ("GFMM"), and one of its affiliates, and the Company's lender, Global Resource Fund ("Global"), pursuant to which GFMM will acquire, for cash, all of the issued and outstanding common shares of NWM ("NWM Shares") subject to a court-approved plan of arrangement (the "Arrangement") under the Business Corporations Act (Ontario).  GFMM will acquire each outstanding NWM Share for cash consideration of C$0.005.

In connection with the Arrangement, GFMM and its affiliate, SFM Holdings, S.A.P.I. de C.V. ("SFM"), have entered into a purchase agreement ("Purchase Agreement") with Global, pursuant to which SFM will satisfy NWM's existing debt to Global and GFMM will purchase the NWM Shares held by Global and all royalties owned by Global. 

Darren Koningen, President & CEO of NWM, stated: "The Arrangement Agreement is essential for the Company's future.  At the gold price levels seen over the last 12 months, the revenues generated by the Company's operation in Mexico have not allowed it to make any debt and interest payments during this time.  The operation urgently requires a significant capital injection in order to expand production levels and help to lower costs.  This is not possible due to the Company's current financial situation."

Mark Selby, Chair of the NWM Board of Directors continues: "After an exhaustive and comprehensive process of reviewing the strategic alternatives available to the Company, and in light of current equity capital market conditions for junior gold miners, we believe this is the most attractive option to preserve value for our shareholders."

Benefits for NWM Shareholders:

  • Provides liquidity for NWM shareholders,
  • Avoids NWM from seeking bankruptcy protection given the Company's large debt position and capital requirements for expansion.

Global has agreed to provide additional interim debt funding up to an aggregate amount of approximately US$2,500,000 in order to cover critical short term capital shortages such that mining operations can continue uninterrupted pending the completion of the Arrangement.  Subject to certain terms and conditions, Global has agreed with the Purchasers not to demand repayment of, or enforce its security on the the debt, while the Arrangement Agreement is in effect.

SFM must pay US$3,000,000 into escrow as a deposit under the Purchase Agreement which could be forfeited to Global as a break fee if the transaction does not close.  Global has agreed with NWM that if the deposit is forfeited to Global, US$300,000 will be forwarded to NWM.  The Purchase Agreement also permits GFMM to acquire Global's interests in NWM in certain cases if the Arrangement is not completed.  Exercise of the purchase option under the Purchase Agreement would result in GFMM holding in excess of 10% of the NWM shares.

If the Arrangement does not receive the required support of NWM shareholders at the annual and special meeting of shareholders to be called in connection with the Arrangement, the Arrangement will not close and the debt (plus interest) owing to Global, will become immediately payable by NWM.  Given its current financial situation, the Company does not expect to have sufficient funds to repay these amounts and would be forced to consider filing for creditor protection.

Background to the Arrangement

The terms of the Arrangement Agreement are the result of a comprehensive process undertaken by NWM to review its strategic alternatives. The process has taken place over the span of several years.

Although the Company has produced gold at an annualized rate of approximately 20,000 ounces over the last two years, a decline in gold prices combined with an inability to raise the additional capital required to expand production has left the Company in a severly financially distressed position.  NWM currently owes Global in excess of US$25,000,000 (principal plus accrued interest).

During November of 2011, NWM engaged a financial advisor to explore potential strategic alternatives; however no suitable outcome was found.  In August of 2013, NWM engaged Macquarie Capital Markets Canada Ltd. ("Macquarie") and initiated a follow-up formal strategic review process.  Macquarie was engaged to design, implement and coordinate the process to review strategic alternatives, including a process to solicit proposals from interested parties.  The process was overseen by a special committee of independent Directors of NWM.

As part of the strategic review process, NWM considered many different alternatives including, business combinations with other entities, a sale of NWM, partial asset sales, strategic debt and equity investments in NWM, and combinations thereof.  During this period several non-binding proposals were received and presented to and analyzed by NWM, in consultation with its legal and financial advisors, and many were shared with the Company's lender Global.  As many of the non-binding proposals were not acceptable to NWM and/or Global, the process stalled on several occasions.  During this time discussions continued to advance with GFMM.

A more detailed summary of the Background to the Arrangement will be provided in the Management Information Circular (the "Circular"), which is expected to be mailed to shareholders of NWM this month.

Transaction Summary

The Arrangement will be completed pursuant to a court-approved plan of arrangement, which will require approval by the affirmative vote of: (i) at least 66 2/3% of the votes cast by the shareholders of NWM at a special meeting of NWM shareholders, voting as a single class, represented in person or by proxy and entitled to vote at the meeting; and (ii) the majority of the votes cast by shareholders of NWM, excluding the votes cast by interested or related parties or joint actors of NWM, including those shares held by Global (approximately 10.8%). The directors and senior officers of NWM, who together hold approximately 11.5% of the outstanding NWM common shares, have entered into voting agreements with GFMM pursuant to which they have each agreed to vote in favour of the Arrangement.  Global has also agreed to support the Arrangement in the Purchase Agreement. Details of the Arrangement and the annual and special meeting will be included in the Circular, which will be mailed to the shareholders of NWM as soon as practicable.  The Arrangement is expected to close in late July or August, 2015.

The special committee of independent NWM directors considered refinancing alternatives potentially available to the Company including the currently proposed Arrangement.  Macquarie has provided an opinion to the Board of Directors of NWM that, based upon and subject to the assumptions, limitations and qualifications contained therein, as of the date hereof, the consideration to be received by NWM shareholders in connection with the Arrangement is fair, from a financial point of view, to NWM shareholders. After due and careful consideration, the NWM special committee unanimously recommended to the Board of Directors of NWM that they authorize and approve the execution of the Arrangement Agreement.  The Board of Directors of NWM has determined that the Arrangement is in the best interest of NWM and its shareholders and has unanimously recommended that NWM shareholders vote in favour of the Arrangement.

In addition to NWM shareholder approval and court approval, the Arrangement will be subject to the satisfaction of certain other conditions.  NWM has also provided GFMM with certain other customary rights, including a non-solicitation covenant and a right to match competing offers.

Advisors and Counsel

Macquarie is acting as NWM's exclusive financial advisor and Minden Gross LLP is acting as legal advisor to NWM.  Canales Dávila, S.C. is acting as Mexican legal advisor to GFMM and  Osler, Hoskin & Harcourt LLP is acting as Canadian legal advisor to GFMM.  Cassels Brock LLP is acting as legal advisor to Global.

About NWM Mining Corporation

NWM is in commercial gold production at its wholly owned Lluvia-Jojoba gold mine.  The mine is an open pit heap leach operation in Sonora State, Mexico.

Additional information about NWM can be found on the NWM website at www.nwmmining.ca or on SEDAR at www.sedar.com.

On behalf of Management and the Board:

"Darren Koningen"

"Mark Selby"

  Cautionary Note Regarding Forward Looking Information

Certain information set forth in this press release contains "forward-looking statements", and "forward-looking information under applicable securities laws. Except for statements of historical fact, certain information contained herein constitutes forward-looking statements, which include the Company's expectations about the completion of the Arrangement and are based on the Company's current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Some of the forward-looking statements may be identified by words such as "will", "expects", "anticipates", "believes", "projects", "plans", and similar expressions. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause the Company's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: liabilities inherent in mine development and production; geological, mining and processing technical problems; mine permits and regulatory approvals required in connection with mining and mineral processing operations; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; changes in commodity prices and exchange rates; currency and interest rate fluctuations; various events that could disrupt operations and/or the transportation of mineral products, including labour stoppages and severe weather conditions; the demand for and availability of rail, port and other transportation services; the ability to secure adequate financing, and management's ability to anticipate and manage the foregoing factors and risks. There can be no assurance that forward-looking statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. The Company undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements outlined in the Arrangement Agreement, which is available on the Company SEDAR profile at www.sedar.com.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy of this press release.

SOURCE NWM Mining Corporation

For further information: For further information: please contact NWM Mining Corporation at (416) 364-6799.


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