Miramar proposes to Sell Majority of its Northern Orion Interest for $8.4 million
- Miramar retains exposure to upside through ownership of 13 million
shares and royalty interest -
MAE - TSE
MAENF - OTC Bulletin Board
VANCOUVER, Sept. 5 /CNW/ - Miramar Mining Corporation today announced
that it has entered into a letter agreement with a Canadian securities dealer
(the "Agent"), whereby the Agent have the right to acquire for purposes of
resale, on a best efforts basis, certain securities including the 42.4 million
of the approximately 55.5 million shares of Northern Orion Explorations Ltd.
currently owned by Miramar in exchange for $8.4 million. Miramar would retain
approximately 13 million shares of Northern Orion, an $800,000 two-year note
and its $18 million royalty on production*.
"This transaction would complete the reorganization of Miramar commenced
in March 1999," said Tony Walsh, Miramar's President and CEO. "Northern Orion
has some excellent copper assets with significant upside potential and we
would retain considerable exposure to that upside by retaining approximately
13 million shares and the existing production royalty. With the
implementation of our Northern Strategy developing very well, I believe the
timing is appropriate to completely focus our company's energies and resources
on building on our Hope Bay and Yellowknife operations."
"Completion of this transaction would result in a significant increase in
Miramar's working capital without any associated equity dilution*," said Mr.
Walsh. "Realizing cash on an asset that has largely been ignored by investors
is a very positive step in bringing value to our shareholders and we can
clearly put this cash to use in generating value from our gold assets*. The
sale of our controlling interest in Northern Orion would further streamline
our organization and result in further reductions in G&A costs, which are
already down significantly from 1999 levels*."
Agreement
Miramar has agreed to sell to the Agent at the Agent's election any time
prior to October 17, 2000, for purposes of conversion and resale, 42.4 million
of its approximately 55.5 million issued shares in Northern Orion, $1.9
million of the $2.7 million Note held by Miramar and the Northern Orion $23.6
million Convertible Debenture that matures in September 2003, for $8.4 million
in cash, which would be payable to Miramar on closing. As a condition of the
deal, Miramar has further agreed to a partial settlement of the existing $2.7
million note due in June 2001 with a new note of $800,000 which would be
payable to Miramar in $400,000 installments by Northern Orion on the first and
second anniversaries of the closing, in cash or shares of Northern Orion at
Northern Orion's election*.
At the same time as the closing between Miramar and the Agent, Miramar
has been advised that Northern Orion plans to complete a financing for $6-8
million to fund its on-going activities*. "Northern Orion would emerge as a
well financed, debt free exploration company well positioned to advance its
exciting copper properties in Cuba and Argentina as a result of these
transactions*," said Mr. Walsh. "This would benefit Miramar through its
significant shareholding and, by advancing the copper properties towards
production, makes realization on the royalty a higher probability*."
Miramar would retain approximately 13 million shares of Northern Orion or
approximately 15% of the issued shares before completion of the anticipated
Northern Orion financing, half of which may be sold at a rate of 100,000 per
month in the market or in blocks of 500,000 or more shares to institutional
investors. The remaining shares may be sold in increments of 500,000 or more
shares commencing on the second anniversary of closing, subject to a first
right of refusal to the Agent on the second half of the shares. Miramar has
agreed that all retained shares will be subject to a voting trust in favor of
Northern Orion management.
Miramar would retain the existing royalty & sales proceeds interest in
Northern Orion's mining assets. The interest is an obligation to pay an
equivalent to a 2.5% NSR in any production from any of Northern Orion's mining
properties to a maximum of $18 million. In addition, if Northern Orion sells
any of its mining assets, it would pay to Miramar 50% of the net proceeds of
the sale up to the maximum of $18 million.
"We have decided to focus on gold and delivering on our Northern
Platform, particularly the exciting Hope Bay project where we have had
tremendous results from this year's work," said Tony Walsh. "Nevertheless, we
will retain approximately 13 million shares of Northern Orion and the
production royalty, which provide significant potential for further
appreciation in value if copper prices recover*."
The transaction is expected to close by October 17, 2000*. Closing of
the proposed transaction is subject to, among other things, completion of due
diligence by the agents, conversion and resale by the agents of the Northern
Orion securities to third parties and any required regulatory approval.
Neither the Northern Orion securities being sold by Miramar nor any
securities that may be offered by Northern Orion in any future financing will
be registered under the United States Securities Act of 1933, as amended, or
the securities laws of any state. These securities may not be offered or sold
in the United States or to U.S. persons without registration unless an
exemption from registration is available.
*This News Release contains forward-looking statements within the
meaning of the United States Private Securities Litigation Reform Act of 1995
concerning the proposed agreement to sell shares and debt of Northern Orion
Explorations Ltd., the use of the proceeds of the agreement for funding work
at the Hope Bay project, Miramar's plans and expectations for the Hope Bay
project and the proposed financing by Northern Orion. These forward-looking
statements are subject to a variety of risks and uncertainties which could
cause actual events or results to differ materially from those reflected in
this forward-looking statement, including, without limitation, extraordinary
changes in commodity or market prices generally or material adverse changes in
the Company's or Northern Orion's business which result in the proposed
agreement not being completed, the Agent's ability to sell the securities,
closing conditions of the agreement not being met, the possibility of adverse
developments at the Hope Bay project or unanticipated costs of bringing the
Hope Bay project to a production decision resulting in additional funding
being required by the Company, and Northern Orion being unable to complete its
equity financing and continue its operations. and other risks and
uncertainties, including those described in the Company's Annual Report on
Form 20-F for the year ended December 31, 1999 and Reports on Form 6-K filed
with the Securities and Exchange Commission.
Certain forward-looking statements in this report are indicated with a
"*".
-30-
For further information: Tony Walsh, President & CEO, Miramar Mining
Corporation, Tel: (604) 985-2572, Fax: (604) 980-0731, Toll Free:
1-800-663-8780, Email: info@miramarmining.com |
