VANCOUVER,
Dec. 18, 2013 /PRNewswire/ - American
CuMo Mining Corporation ("CuMoCo" or the "Company") (TSXV: MLY)
(OTCQX: MLYCF) is pleased to announce its intention to
undertake a financing to raise up to US$25
million (the "Financing") through the sale of up to 100
units ("Units") of its subsidiary, Idaho CuMo Mining Corporation
("Idaho CuMo"), at a price of US$250,000 per Unit, with each Unit consisting of
a unsecured and non-transferable promissory note in the principal
amount of US$250,000 (a "Note") and a
right (the "Silver Purchase Right") to enter into a silver purchase
and sale agreement (a "Silver Purchase Agreement") with Idaho
CuMo.
The Notes would bear interest at a rate of 6%
per annum, payable semi-annually on June
30 and December 31, and would
have a term of 5 years. With the consent of the holder of the
Note, Idaho CuMo could prepay all or any portion of the principal
amount outstanding under such Note at any time, provided that any
prepayment in whole or in part of the Note would cause the Silver
Purchase Right to immediately expire.
The Silver Purchase Right would be exercisable
by the holder within 30 days of completion of a feasibility study
and decision by the Company to place its CuMo Project located in
Idaho into commercial production
provided that the Note had not been repaid in full or in part by
the Company. Each Silver Purchase Right would, if exercised,
require the purchaser to purchase and Idaho CuMo to sell to the
purchaser refined silver in an amount equal to 0.5% of the silver
(in any form) produced from the CuMo Project, up to a maximum of
312,500 ounces of refined silver (the "Silver Maximum") pursuant to
a Silver Purchase Agreement.
If all Units under the Financing are issued and
all Silver Purchase Rights were exercised, Idaho CuMo would be
required to sell up to a maximum of 31,250,000 ounces of refined
silver, which silver would be deliverable from 50% of the silver
produced from the CuMo Project. Upon exercise of the Silver
Purchase Right, the purchaser would pay an upfront cash payment of
US$250,000 (the "Deposit") per Silver
Purchase Right exercised upon execution of the Silver Purchase
Agreement, which payment would be made by way of a set off against
repayment of the principal amount of loans owing by Idaho CuMo to
the purchaser. The Deposit would be unsecured.
The purchase price for each ounce of refined
silver purchased would be comprised of (a) an ongoing cash payment
("Ongoing Payment"), being the lesser of (i) the London silver spot price and (ii) US$5/oz, subject to an inflationary adjustment;
and (b) a deposit reduction amount, being the amount by which the
silver spot price exceeds the Ongoing Payment, paid as a reduction
to the Deposit and payable until such time as the Deposit is
reduced to zero.
The term of the Silver Purchase Agreements would
continue until the earlier of (i) the date on which the Silver
Maximum has been delivered to the purchaser; and (ii) 40 years
(subject to automatic 10-year renewals if the CuMo Project is in
operation). Any uncredited balance of the Deposit at the end
of a Silver Purchase Agreement's term would be refunded to the
purchaser.
The Financing is subject to TSX Venture Exchange
approval and the preparation and approval by the parties of
definitive legal documentation.
CuMoCo may pay a cash finder's fee of 5%, in
accordance with TSX Venture Exchange policy, in connection with the
Financing. The funds raised in the Financing would be used to
continue advancing the CuMo Project, including work towards an
updated mineral resource estimate, preparing an updated economic
analysis, expanded metallurgical testing, in-fill drilling and
environmental base-line studies, as well as for general working
capital purposes.
Corporate and CuMo Project Update
Last week, CuMoCo participated in the 119th
Annual Exposition of the Northwest Mining Association, held in
Reno, Nevada. Interest in the CuMo
Project from participants was significant. During this time, CuMoCo
entered into an agreement with Idaho-based Timberline Drilling, Inc.
("Timberline") pursuant to which Timberline agreed to purchase all
remaining drills, support equipment and inventory owned by
CuMoCo. As part of their agreement, CuMoCo agreed to hire
Timberline for a 50,000 foot minimum drilling contract over the
next three years. With operations in the Western U.S. and
Alaska, Timberline specializes in
underground and surface core drilling and has drilled over 650,000
feet this year with 97%+ recovery and an industry leading safety
record.
Throughout much of 2013, the CuMo Project has
been undergoing a Supplemental Environmental Assessment ("SEA")
process as prescribed under the United States National
Environmental Protection Act ("NEPA"). During the SEA public
comment period, the project garnered support from both the Idaho
Department of Commerce and Boise
County Board of County Commissioners for the completion of
the exploration.
CuMo Project leaders will continue working with
U.S. Forest Service to support the agency's completion of the SEA
process. The Company anticipates that the SEA may be approved by
mid-2014 and drilling to resume on public lands.
About CuMoCo
CuMoCo is focused on advancing its CuMo Project
towards feasibility and establishing itself as one of the largest
and lowest-cost molybdenum producers in the world as well as a
significant producer of copper and silver. Management is continuing
to build a strong foundation from which to move the Company and the
CuMo Project forward.
On behalf of the Board of Directors
of
American CuMo Mining Corporation
Shaun
Dykes
Chief Executive Officer
Neither the TSX Venture Exchange nor its
Regulation Service Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this new release.
Forward-looking information
This news release contains "forward-looking
information" within the meaning of applicable Canadian securities
legislation including, but not limited to, statements that address
activities, events or developments that the Company expects or
anticipates will or may occur in the future, such as the completion
of the Financing and whether or not it will be fully subscribed,
whether or not Silver Purchase Rights will be exercised, the
Company's ability to move its CuMo Project to feasibility and
production, and to become one of the largest and lowest-cost
molybdenum producers in the world as well as a significant producer
of copper and silver. Forward-looking information is based on a
number of material factors and assumptions, including the result of
exploration activities, the ability of the Company to raise the
financing for a feasibility study and to put the CuMo project into
production, that no labour shortages or delays are experienced,
that plant and equipment function as specified that the Court will
not intervene with the Company's proposed exploration activities at
the CuMo Project, and the ability of the Company to obtain all
requisite permits and licenses to advance the CuMo Project and
eventually bring it into production. Forward-looking information
involves known and unknown risks, future events, conditions,
uncertainties and other factors which may cause the actual results,
performance or achievements to be materially different from any
future prediction, projection or forecast expressed or implied by
the forward-looking information. Such factors include, among
others, the interpretation and actual results of current
exploration activities; changes in project parameters as plans
continue to be refined; future prices of molybdenum, silver and
copper; possible variations in grade or recovery rates; labour
disputes and other risks of the mining industry; delays in
obtaining governmental approvals or financing, as well as those
factors disclosed in the Company's publicly filed documents,
including the Company's Management's Discussion and Analysis for
the period ended September 30,
2013. 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 information 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 information. Except as required under applicable
securities legislation, the Company undertakes no obligation to
publicly update or revise forward-looking information.
SOURCE American Cumo Mining Corporation