New press release:
FEBRUARY 12, 1998
Imperial and Princeton to Merge
VANCOUVER, BRITISH COLUMBIA--Imperial Metals Corporation
("Imperial") and Princeton Mining Corporation ("Princeton") are
pleased to announce that they have agreed to merge by way of plan
of arrangement, subject to shareholder and regulatory approval and
subject to a number of conditions being fulfilled, including
receipt of appropriate agreements from major creditors including
the Japan Group, the British Columbia Ministry of Employment and
Investment, Sumitomo Corporation and R.E.W. Holdings Ltd.
The plan of arrangement will be structured with the dual objective
of combining the mining operations of Princeton and Imperial and
satisfying the best efforts undertaking of Princeton under a loan
agreement between Princeton as borrower and R.E.W. Holdings Ltd.
as lender, to reorganize the assets of Princeton in order to make
use of non mining assets in Princeton for the benefit of Princeton
shareholders through the acquisition of certain real property
assets.
Under the plan of arrangement, three new classes of shares will be
created in Princeton: Class B voting common shares, Class C
non-voting shares and non-voting preferred shares. All of the
assets and liabilities of Princeton, including the existing
debentures will be transferred to a new company created by
Princeton ("New Princeton"). The issued share capital of New
Princeton will consist of Class A voting common shares.
Princeton shareholders will exchange their common shares of
Princeton on the basis of one common share of Princeton for one
Class B voting common share of Princeton plus one preferred share
of Princeton. Princeton shareholders will then exchange their
preferred shares of Princeton on the basis of one preferred share
of Princeton for one Class A voting common share of New Princeton.
Princeton will then acquire the real property assets in exchange
for Class B voting common shares and Class C non-voting shares.
Imperial will acquire all of the Class A common shares of New
Princeton by issuing 0.073 of one common share of Imperial for
every one Class A common share of New Princeton. The loan from
R.E.W. Holdings Ltd. will be satisfied in full through cash
repayment. The $9 million in debentures outstanding will be
satisfied in full through a repayment in shares of Imperial with
each holder of Princeton debentures receiving 486.1641 shares of
Imperial for each $1,000 of debentures held. In total, Imperial
will issue 12,500,000 common shares to Princeton shareholders and
debenture holders to acquire New Princeton and settle its
outstanding debentures.
The benefits to Princeton shareholders of this reorganization will
include ownership of shares in a company which combines the
existing mining assets of both Imperial and Princeton including
the Huckleberry Mine and the Mount Polley Mine. In addition, they
will hold approximately $2.8 million ($0.025 per existing
Princeton common share) worth of voting shares in a company
(formerly Princeton) with income producing real estate properties
located primarily in the Greater Vancouver area. These income
producing properties will be acquired from Madison Development
Corporation and affiliates ("Madison") and Vanac Development
Corporation and affiliates ("Vanac"). Madison and Vanac have been
involved in the ownership, construction and management of real
estate properties in the Vancouver area for the last 20 years.
Shareholders of Princeton holding in excess of 43 million common
shares and debenture holders of Princeton holding $6,200,000 of
debentures have agreed in writing or otherwise to support and vote
in favor of the merger. To be successful, the merger must be
approved by a two thirds majority of shareholders and debenture
holders present at the meeting called to consider it. A breakup
fee of $500,000 plus reasonable transaction expenses will be
payable to Imperial in the event that the directors or
shareholders of Princeton elect to proceed with a competing merger
proposal from any third party.
The company resulting from the merger of Imperial and Princeton,
to be called Imperial Metals Corporation, will produce 55 million
pounds of copper and 57,000 ounces of gold per year from two
recently built British Columbia mines: the Mount Polley mine owned
55 percent by Imperial and 45 percent by Sumitomo Corporation and
the Huckleberry mine currently owned 60 percent by Princeton and
40 percent by the Japan Group, a consortium comprised of Marubeni
Corporation, Mitsubishi Materials Corporation, Dowa Mining Co.
Ltd. and Furukawa Co. Ltd. Imperial will be the operator of both
mines.
The move will significantly reduce costs through improved
efficiency, better economies of scale and overhead reduction. The
new company will emerge stronger and better able to deal with the
challenges of low metal prices and the tougher competitive
environment presently facing the mining industry.
Imperial will continue to advance its 100 percent owned Silvertip
project to commercial production. A recently completed
exploration program increased the mineral resource at Silvertip to
2.57 million tonnes grading 325 g/t (9.490 oz/t) silver, 8.8
percent zinc, 6.4 percent lead and 0.63 g/t gold. There is
excellent potential for expanding this high grade deposit. Plans
are now being considered for a starter open pit followed by
underground mining with major process equipment to come from the
100 percent owned Goldstream mill, where operations ceased in
1997. Having just completed the permitting, financing, and
construction of two new mines in British Columbia, Imperial is
well positioned to rapidly advance the Silvertip project.
A recently completed drill program at the 100 percent owned
Similco mine, now on standby, has outlined a resource of 142
million tonnes grading 0.397 percent copper with gold and silver
credits. Prior to suspension of operations in November, 1996,
Similco produced 1.74 billion pounds of copper, 9.1 million ounces
of silver and 730,000 ounces of gold. This fully permitted mine
can be reopened with relatively little capital when metal prices
improve. The potential for further expansion of reserves is
considered excellent here as well. Also, the 100 percent owned
Giant Copper property, located near Similco, could add significant
value to the Similco mine.
Mutual due diligence and receipt by Princeton of a satisfactory
fairness opinion are to be completed in time for a mailout to
Princeton shareholders on or before March 18, 1998. A
shareholders' meeting is scheduled for April 9, 1998 with closing
of the transaction shortly thereafter but no later than May 15,
1998. Concurrently with this transaction, Imperial is considering
a private placement of up to 5 million shares at $1.00 per share,
subject to regulatory approval.
William H. Myckatyn, President and Chief Executive Officer of
Princeton, said "We are pleased with the merger of Imperial and
Princeton. The merger with Imperial provides Princeton
shareholders with the critical mass and financial strength to get
through these difficult times."
Imperial will use its strengths as a proven mine developer and
operator to attract new projects and access debt and equity
markets as needed to satisfy its capital requirements. Imperial
intends to grow primarily through the development of advanced
projects and acquisitions.
/T/
Pierre Lebel, William H. Myckatyn,
President President and C.E.O.
Imperial Metals Corporation Princeton Mining Corporation
/T/
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FOR FURTHER INFORMATION PLEASE CONTACT:
Imperial Metals Corporation
Pierre Lebel
President
(604) 669-8959
(604) 687-4030 (FAX)
or
Princeton Mining Corporation
William H. Myckatyn
President and CEO
(604) 688-2511
(604) 688-4772 (FAX)
INDUSTRY: PCS
SUBJECT: TMN
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