EACOM Timber Corporation

EACOM Timber Corporation

December 10, 2009 21:41 ET

EACOM Signs Definitive Agreement to Purchase The Big River Sawmill

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 10, 2009) - EACOM Timber Corporation (TSX VENTURE:ETR.H) today announced the Company has signed a definitive agreement with Domtar Pulp and Paper Inc, a subsidiary of Domtar Corp, to purchase a sawmill located in Big River, Saskatchewan. The closing of this transaction is subject to approval by the TSX-Venture Exchange and other customary conditions of closing.

Mr. Rick Doman, President and CEO of Eacom said, "The acquisition of this mill is a first step for Eacom as it pursues its vision of becoming a significant softwood lumber producer. We are pleased that our first asset acquisition is a state of the art sawmill that is ready to start up, but first we need to secure a long-term softwood sawlog supply. We are looking to add more production capacity and continue to review other asset acquisition opportunities."

The Big River sawmill has been idle since 2006 following the closure of the Prince Albert pulp and paper mill. The sawmill underwent significant capital upgrades in 2000 and currently has an estimated maximum production capacity of 250 million board feet annually.

EACOM has agreed to purchase the sawmill for $3,000,000 on an "as is where is" basis and has paid $140,000 to date towards the purchase price. Under the terms of the agreement EACOM has also agreed to assume Domtar's environmental obligations which involves ongoing site monitoring and future site remediation if and when required. EACOM expects that all holding costs related to the sawmill, which include scheduled periodic maintenance, security, and property taxes will average approximately $80,000 per month based on current costs.

EACOM had approximately $4 million in working capital at the end of November and has another $3 million in cash being held in escrow following a non brokered private placement announced on November 13, 2009. These funds will be released from escrow upon TSX Venture Exchange approving the purchase of the Big River sawmill.

The start-up of operations at Big River will depend on, among other things, EACOM securing a timber supply on terms acceptable to EACOM. EACOM has not secured a timber supply to operate the mill, and there is no assurance that EACOM will be able to secure a timber supply in the future. EACOM plans to pursue other alternatives for the mill if it cannot negotiate a timber supply, on acceptable terms, in Saskatchewan. If not there may be other regions in Canada that may have timber available and EACOM would have to consider moving the sawmill to a region with available timber.

Escrowed Private Placement Details

EACOM issued 10,000,000 Units for gross proceeds of $3,000,000 on the non brokered private placement. Each Unit consists of one common share and one warrant to purchase a common share. The Units were priced at $0.30. Each Warrant entitles the holder to acquire one common share for a price of $0.60 up until the third anniversary of the private placement closing. EACOM would issue up to 10,000,000 common shares for proceeds of up to $6 million on the exercise of the Warrants. The Warrants will not be eligible for listing.

Statements in this news release other than historical information are forward-looking statements subject to risks and uncertainties. Actual results could differ materially depending on factors such as the availability of resources, the timing and effects of regulatory actions, the strength of competition, the outcome of litigation and the potential for obtaining timber supply and other acquisition transactions. Additional information regarding risks and uncertainties is set forth in the current MD&A for EACOM Timber Corporation on file with the Canadian Securities Commissions.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • EACOM Timber Corporation
    Michael Liggett
    604.279.8711 (FAX)