Northern Star Mining Corporation
TSX VENTURE : NSM

Northern Star Mining Corporation

July 07, 2009 08:28 ET

Anglo Pacific Group to Provide CDN$8.0 Million to Northern Star in Exchange for Net Smelter Return

VAL D'OR, QUEBEC--(Marketwire - July 7, 2009) -

THIS NEWS RELEASE IS NOT FOR DISTRIBUTION IN THE UNITED STATES OR TO U.S. NEWS AGENCIES

Northern Star Mining Corporation (TSX VENTURE:NSM) ("NSM" or the "Company") is pleased to announce that Anglo Pacific Group PLC - APF.L ("Anglo Pacific") has agreed subject to various conditions to purchase a net smelter return from the Company for CDN$8.0 million and has agreed to participate in the Company's previously announced equity offering, for a total up to 4,000,000 units at a price of CDN$0.50 per unit.

The agreement is an important strategic milestone for NSM as it should enable the Company to complete the construction and development of the Gauthier decline at its Malartic-Midway gold project (the "Midway Project") in Quebec, Canada with limited further dilution to the Company's share capital.

Under the terms of the agreement, Anglo Pacific will finance the Company through a convertible debenture in the principal amount of CDN$8.0 million (the "Convertible Debenture") which will be repaid through a 2.5% net smelter return royalty (the "NSR") on the Midway Project and the Company's McKenzie Break project located in Fiedmont and Courville Townships of Quebec (the "McKenzie Break Project"). See the Company's news release dated February 23, 2009 for details of the Company's acquisition of a 60% undivided interest in the McKenzie Break Property from Britannica Resources Corp. (TSX VENTURE:BRR). In the event that the price of gold exceeds US$1,250 per ounce, the NSR will increase to 2.75% but will decrease to 1.5% on all production from the Midway Project at such time as 2,000,000 ounces of gold have been produced therefrom if the price of gold is below US$1,250 per ounce. Upon repayment of the principal amount of CDN$8.0 million, the Convertible Debenture will convert to a straight net smelter return royalty.

The Company has also agreed to pay a 1% NSR on all production from the Company's mill or its replacement from properties other than the Midway Project or the McKenzie Break Project but excluding any toll milling undertaken by NSM on behalf of unassociated third parties.

The Company will make quarterly interest payments at an annualized rate of Canadian base rate plus 2% upon the outstanding balance of the Convertible Debenture from time to time, after quarterly NSR payments have been received and deducted.

The Convertible Debenture and subsequent NSR will be secured against the assets of the Company including the Midway Project and Anglo Pacific shall have the right, at its discretion, to convert any outstanding principal amount under the Convertible Debenture into common shares of the Company at an agreed upon conversion price. In the event of such conversion, the NSR to Anglo Pacific will cease.

The Convertible Debenture is subject to the completion of Anglo Pacific's due diligence, the execution of formal documentation, the satisfactory restructuring of the Company's US$42,000,000 of outstanding senior secured notes as contemplated in the Company's news release of July 7, 2009 and the acceptance of the TSX Venture Exchange. A break fee of 500,000 warrants to purchase a total of 500,000 common shares of the Company at a price of CDN$0.60 per share will be payable to Anglo Pacific in the event the Company elects not to proceed with the Convertible Debenture.

Casimir Capital acted as financial advisor for this transaction.

Anglo Pacific Group PLC generates returns for shareholders by receiving royalties from operating mines including coking coal mines in Australia owned by BHP and Rio Tinto. The strategy of Anglo Pacific is to pay a substantial proportion of these royalties to shareholders as dividends, while reinvesting the balance in strategic listed and unlisted metal exploration and production opportunities with a view to obtaining more royalties for shareholders. Anglo Pacific will continue to adopt an active, merchant banking approach to mining projects to achieve better returns at reduced risk. For further information see www.anglopacificgroup.com

ON BEHALF OF THE BOARD

Jonathan Awde, Vice-president, Corporate Finance

This news release contains forward-looking statements, which relate to future events or future performance and reflect management's current expectations and assumptions. Such forward-looking statements reflect management's current beliefs and are based on assumptions made by and information currently available to the Company. Investors are cautioned that these forward looking statements are neither promises nor guarantees, and are subject to risks and uncertainties that may cause future results to differ materially from those expected. These forward-looking statements are made as of the date hereof and, except as required under applicable securities legislation, the Company does not assume any obligation to update or revise them to reflect new events or circumstances.

This press release, required by applicable Canadian laws, is not for distribution to U.S. news services or for dissemination in the United States, and does not constitute an offer of the securities described herein. These securities have not been registered under the United States Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States or to U.S. persons unless registered or exempt therefrom.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Northern Star Mining Corporation
    Jonathan Awde
    Vice-president, Corporate Finance
    Toll Free (800) 460-5031 or (819) 825-8088
    (819) 825-1199 (FAX)
    www.nsmgold.com