Strategic Resource Acquisition Corporation

Strategic Resource Acquisition Corporation

January 22, 2007 08:30 ET

SRA Closes C$20 Million Special Warrant Equity Financing and Acquires Tennessee Zinc Mines and Mill

TORONTO, ONTARIO--(CCNMatthews - Jan. 22, 2007) - Strategic Resource Acquisition Corporation ("SRA" or the "Company") is pleased to announce that on December 19, 2006 it completed a special warrant equity private placement to raise an aggregate of C$20 million. The net proceeds were used in part to complete the acquisition of a mining complex consisting of five Tennessee zinc mines and a mill (collectively, the "Mines") formerly operated by Pasminco. The Mines are located near Gordonsville, Tennessee, about 50 miles east of Nashville. The acquisition was made by Mid-Tennessee Zinc Corporation ("MTZ"), a wholly-owned subsidiary of the Company. The private placement was arranged by a syndicate led by Blackmont Capital Inc., including Haywood Securities Inc., Octagon Capital Corporation and Paradigm Capital Inc. The Company expects to undertake an initial public offering in 2007 in order to raise the equity for the mine restart.

The assets acquired by MTZ consist of five underground zinc mines which form one mining complex and also include all of the mine infrastructure and have an estimated replacement value of at least US$250 million. The resources in the mines and additional mineral rights acquired are estimated to contain over 26 million tons of zinc resources, at an historic grade of 3.25% contained zinc calculated by Pasminco in 2002 when it was the operator. These resources are considered historical in nature and are not in compliance with CIM resource/reserve definitions. A resource report to NI 43-101 standards will be prepared.

The Mines have produced at the rate of about 100 million pounds of payable zinc metal annually for a cumulative total of 2.662 billion pounds of zinc metal. The Gordonsville concentrator experienced a 94.6% mill recovery and produced a high quality concentrate with 64% contained zinc metal, together with payable germanium. The Mines have river access leading to the Mississippi River allowing for shipment to smelters anywhere in the world. The Company has commenced smelter discussions.

The Mines also produce, as by-products, limestone aggregate used locally in the concrete, construction and road-building industries and agricultural lime, which is marketed locally to the farming industry to optimize fertilizer application.

It is anticipated that it will take about 12 months to re-activate the Mines with mining restarting in the third quarter of 2007 and mill output in the first quarter of 2008. Upon full production, the Mines are expected to employ about 250 people.

Contact Information

  • Strategic Resource Acquisition Corporation
    Victor P. Wyprysky
    President and Chief Executive Officer
    (416) 861-1833