SOURCE: FinMetal Mining, Ltd.

May 29, 2007 09:00 ET

FinMetal Signs MOU to Acquire 51% of Hälväla Nickel Mine

Includes 10 Additional Nickel Properties in Enonkoski Nickel Belt

TAMPERE, FINLAND--(Marketwire - May 29, 2007) - FinMetal Mining Ltd. (OTCBB: FNMM) is pleased to announce the signing of a Memorandum of Understanding ("MOU") to form a Joint Venture ("JV") with Magnus Minerals OY ("Magnus") to develop nickel (Ni) reserves in a former nickel-producing region of Finland known as the "Enonkoski Nickel Belt." The JV will consist of eleven projects including the former producing Hälväla Nickel Mine, which will be the main focus of this year's intensive exploration program beginning this summer.

Former Inco VP of Exploration and current FinMetal Director Robert Horn commented, "In the past year, nickel prices have jumped 155 percent while inventories have plunged 78 percent. This has caused unprecedented tightness in the market and consequently much higher prices as there are very few significant supplies coming on stream to fill an ever-increasing demand."

Mr. Horn continued, "Our first objective will be to prove a small high grade reserve that can be placed rapidly into production in this old, established mining camp. The Enonkoski Belt represents a relatively low-risk exploration target as it contains proven historic nickel reserves that have not been explored by modern geophysical and geological techniques. The Hälväla Mine has significant amounts of nickel and contains a resource estimated by the Geological Survey of Finland ("GTK") that extends to the 600-meter level."

History of the Hälväla Nickel Mine

Magnus has researched the background to mining in the Enonkoski Belt from original reports from Outokumpu Oy and the GTK much of which is in hard copy reports in Finnish. Hälväla began operation in 1971. It was mined only to a depth of 265 meters and has a reported remaining resource of 1.5% nickel. A deep intersection of nickel mineralization contained more than 20 meters with 1.7% nickel. Our initial exploration program will check the validity of the reported resource estimate and the deep high grade drill intersection followed by a down-hole electromagnetic survey to seek extensions.

FinMetal VP of Exploration Steve Balch pointed out that as promising as Hälväla is, the other 10 properties in the area may hold significant resources. "While the Hälväla Mine is our primary target for immediate exploration and development, in my opinion, there is a high potential for the discovery of additional deposits using a combination of detailed structural geology and geophysics."

He added, "None of the eleven projects contained in this proposed transaction have been subject to modern-day exploration. FinMetal Consulting Geologist, Dr. Brian Marten, and I will be heading to Finland on the 27th of May to begin the first phase of our current work programs at Tainiovaara and Rautavaara and to design an immediate work program for the Hälväla Mine and our other projects in the Enonkoski Belt."

Terms of the Proposed Transaction

FinMetal can acquire ownership from Magnus of up to a fifty-one (51%) percent interest in certain valid claim reservations, and pending claims located in the Enonkoski Nickel Belt. To do so, it must fulfill a US $10 million work commitment and pay EUR 3 million in option payments. Finmetal will be the operator of the JV.

Once FinMetal has earned a 51% interest, both FinMetal and Magnus will convert their interest to a working interest. If either party is unable or unwilling to fund their share of continued exploration and other required expenditures, the working interest would be reduced proportionally. In the case of Magnus, the working interest can fall to no less than 10%. At this point, Magnus' interest would convert into a carried interest. FinMetal will have the right to buy this 10% carried interest for US $10 million.

FinMetal has paid EUR 30,000 as a non-refundable payment towards the option payments and owes the balance of EUR 2.97 million of option payments to Magnus with EUR 270,000 payable at closing (expected to be on or before May 30th, 2007), EUR 600,000 by November 30th, 2008, EUR 900,000 by November 30th, 2009, and EUR 1,200,000 by November 30th, 2010. FinMetal must also perform US $10 million of work in the area, with minimum expenditures of $1.8 million by November 30th, 2008, $2.2 million by November 30th, 2009, $2.8 million by November 30th, 2010, and $3.2 million by November 30th, 2011.

During the first 18 months FinMetal commits to fly an airborne EM survey (approximately 5,000 line-km) and a drill program of approximately 5,000 meters.

On Behalf of the Board:

Daniel Hunter - CEO

FinMetal Mining Ltd.
Finlaysoninkuja 9
FIN-33210 Tampere, Finland
Phone: +358 3 260 4331
Fax: +358 3 260 4330
e-mail: info@finmetalmining.com
www.FinMetalMining.com

Disclaimer

This release contains forward-looking statements that are based on the beliefs of FinMetal Mining Ltd.'s management and reflect FinMetal Mining Ltd.'s current expectations as contemplated under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. When used in this release, the words "estimate," "project," "believe," "anticipate," "intend," "expect," "plan," "predict," "may," "should," "will," "can," the negative of these words, or such other variations thereon, or comparable terminology, are all intended to identify forward-looking statements. Such statements reflect the current views of FinMetal Mining Ltd. with respect to future events based on currently available information and are subject to numerous assumptions, risks and uncertainties, including, but not limited to, risks and uncertainties pertaining to development of mining properties, changes in economic conditions and other risks, uncertainties and factors, which may cause the actual results, performance, or achievement expressed or implied by such forward-looking statements to differ materially from the forward-looking statements.

Contact Information

  • Contact:
    FinMetal Mining Ltd.
    Finlaysoninkuja 9
    FIN-33210 Tampere, Finland
    Phone: +358 3 260 4331
    Fax: +358 3 260 4330
    e-mail: info@finmetalmining.com