/NOT FOR DISTRIBUTION TO A US NEWSWIRE SERVICE OR FOR DISSEMINATION IN
THE UNITED STATES/
Overnight marketing agreement signed to raise a minimum of $160 million
Trading symbol (TSX-V): RML
VANCOUVER, Oct. 11 /CNW/ - Rusoro Mining Ltd. ("Rusoro"), is pleased to announce that it has agreed with Gold Fields Netherlands Services BV ("Gold Fields"), a wholly-owned subsidiary of Gold Fields Limited (JSE:GFI, NYSE:GFI) whereby Rusoro will acquire all of Gold Fields' Venezuelan assets, including the producing Choco 10 mine situated in the El Callao district of Bolivar State, Venezuela.
This strategic business combination provides Rusoro with immediate gold production and confirms Rusoro as a focused gold company with an exceptional growth profile. The business combination provides Rusoro with the following benefits:
- Immediate Production. Choco 10 has been operational since 2006 and
the annualized targeted production for the combined assets is
150,000 ounces per year by the end of 2008.
- Significant Expansion Opportunities. Choco 10 is designed to allow
significant capacity expansion.
- Exceptional Regional Synergies. Choco 10 is approximately
four kilometres from Rusoro's Increible 6 development property. The
combination also contributes over 25,000 hectares of highly
prospective exploration properties in the El Callao Region.
- Unlocking Venezuelan Value. Rusoro's proven ability to operate in
Venezuela will enable the company to unlock further value from these
Venezuelan assets.
- Regional Consolidation. Rusoro is well financed with approximately
CDN$50 million in cash and is well placed to continue its regional
consolidation strategy.
- Significantly Increased Reserve and Resource Base. The combined
company's Measured and Indicated Resources will total 6.6 million
attributable ounces with additional Inferred Resources of
6.2 million attributable ounces. Choco 10 has 1.7 million
attributable Reserve ounces, which are included in the Resource
ounces described above.
Upon completion of the acquisition, Rusoro's management plans to use its Venezuelan operating experience to resolve certain hurdles encountered by Gold Fields at Choco 10. Rusoro's focus over the next 12 to 24 months at Choco 10 will be to optimize operating efficiency, lower costs and study production ramp-up alternatives.
The combined company's reserves and resources are set out in the tables below. Attributable ounces are based on Gold Fields' 95% interest in Choco 10. Updated NI43-101 technical reports on the Choco 10 property and the company's Increible 6 property, where the company has recently completed a 40,000 metre drill program, are in progress and are expected to be completed within the next 45 days.
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Combined Assets - Reserves (Choco 10, 95% Basis)
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Reserves Tons (Mt) Grade (g/t) Gold ('000 oz)
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Proven 1.9 3.0 180
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Probable 13.6 3.4 1,482
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Total Reserves 15.4 3.4 1,662
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Combined Assets - Measured & Indicated Resources (inclusive of Reserves)
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Project Tons (Mt) Grade (g/t) Gold ('000 oz)
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Measured
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Choco 10 (95%) 2.3 2.9 221
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Indicated
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Increible 23.5 2.1 1,591
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Emilia - - -
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San Rafael/El Placer 0.9 16.6 490
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Valle Hondo 3.5 0.9 103
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Ceiba - - -
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Choco 10 (95%) 53.8 2.4 4,225
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Total Indicated 81.7 2.4 6,409
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Total Measured and
Indicated Resources 84.0 2.5 6,630
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Combined Assets - Inferred Resources
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Project Tons (Mt) Grade (g/t) Gold ('000 oz)
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Increible 17.5 2.0 1,099
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Emilia 0.7 3.9 83
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San Rafael/El Placer 0.7 15.7 367
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Valle Hondo 47.0 0.9 1,344
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Ceiba 1.6 9.2 458
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Choco 10 (95%) 40.8 2.2 2,869
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Total Inferred Resources 108.2 1.8 6,220
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Choco 10 information is based on Gold Fields' current in-situ resource models as adjusted by Rusoro. The Gold Fields estimates used three-dimensional computerized models containing geological data and kriged estimated grades at a cutoff of 0.5 g/t Au. An NI43-101 compliant resource estimate commission by Rusoro on the Choco 10 property is currently in progress and is expected to be completed within the next 45 days.
Rusoro's presently filed NI43-101 (dated August 2006) compliant resource base totals 1.03 million Indicated ounces of gold (9.1 million tonnes @ 3.5 g/t Au) and 3.02 million Inferred ounces of gold (59.0 million tonnes @ 1.6 g/t Au) (see Rusoro news release dated November 9, 2006 for details). An updated NI43-101 compliant report on the company's Increible 6 property is currently in progress and is expected to be completed within the next 45 days.
Mr. Gregory Smith, P.Geo, the Vice-President Exploration of the Company, is the Qualified Person as defined by NI43-101, and is responsible for the accuracy of this news release.
Under the agreed terms, Rusoro is to acquire 100% of Gold Fields' Venezuelan assets for US$150 million in cash, US$30 million in a convertible vendor take-back loan plus the issuance of 140 million Rusoro shares.
Rusoro has entered into an overnight marketing agreement to raise a minimum of $160 million. Canaccord Adams is the co-lead agent with GMP Securities in the financing syndicate which includes PI Financial. The vendor take-back loan: is for a term of 3 years; is unsecured; provides for annual interest at 7%; and is convertible at the higher of a 33% premium to the financing price pursuant to the $160 million financing described above, and US$3.00.
Rusoro is pleased to confirm that on closing the transaction, Gold Fields will become a significant shareholder in the company, holding approximately 38% of the company's shares. Gold Fields has agreed that it will not sell any of its shares for the period of 8 months after closing and has agreed to restrictions on resales after that time in order to maintain an orderly market. Subject to Gold Fields maintaining certain shareholding thresholds, Gold Fields will be entitled to nominate up to 2 board members to the Rusoro board.
It is anticipated that the transaction will be structured as a statutory merger under BVI law. The business combination has the support of the Boards of Directors of both Rusoro and Gold Fields. In addition, the Rusoro Board and key shareholders have provided Gold Fields with irrevocable commitments, representing a majority of Rusoro's outstanding shares, to vote their shares in favour of the transaction. Closing of the business combination is expected to occur in early December 2007.
Gold Fields and Rusoro have agreed to cooperate on all operating, development and in-country discussions regarding the Venezuelan assets until closing. The business combination between Rusoro and Gold Fields is subject to customary conditions, including receipt of all requisite third party and regulatory approvals and consents and approval by shareholders of Rusoro.
Commenting on the transaction, Andre Agapov, CEO of Rusoro said, "The acquisition of Choco 10 provides our company with strategic and geographic synergies, providing Rusoro shareholders with an opportunity to rapidly grow the Company in an accretive manner."
Company President George Salamis stated that, "The successful completion of this transaction will dramatically expand and accelerate Rusoro's production growth profile and offers an excellent opportunity to fast track production at the Increible 6 project, while moving us significantly closer to positioning ourselves as an intermediate gold producer."
Rusoro's financial advisor is Endeavour Financial International Corporation and its legal advisor is Anfield Sujir Kennedy & Durno.
ON BEHALF OF THE BOARD
"Vladimir Agapov"
Vladimir Agapov, Chairman
The TSX Venture Exchange has not reviewed and does not take responsibility for the adequacy or accuracy of this release. The foregoing information may contain forward-looking statements relating to the future performance of Rusoro Mining Ltd. Forward-looking statements, specifically those concerning future performance, are subject to certain risks and uncertainties, and actual results may differ materially. These risks and uncertainties are detailed from time to time in the Corporation's filings with the appropriate securities commissions.