Sandwell Mining Ltd.
TSX VENTURE : SDM.H

November 30, 2009 12:27 ET

Sandwell Mining Ltd. Provides Update on Acquisition of MBAC Opportunities & Financing Inc.

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 30, 2009) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

Blair Murdoch, President and CEO of Sandwell Mining Ltd. ("Sandwell" or the "Company") (TSX VENTURE:SDM.H), is pleased to provide an update regarding the acquisition (the "Transaction") of MBAC Opportunities and Financing Inc. ("MBAC").

Transaction Terms

The Company and MBAC are pleased to announce that further to the Letter of Intent ("LOI") executed by the parties dated October 1, 2009 as previously announced by Sandwell (see News Release dated October 2, 2009), the Company and MBAC have executed a formal amalgamation agreement dated November 26, 2009 with respect to the Transaction. By way of a three cornered amalgamation, Sandwell will acquire all of the issued and outstanding shares of MBAC, including those shares of MBAC issuable immediately prior to completion of the Transaction upon exercise of (i) outstanding special warrants of MBAC, and (ii) subscription receipts of MBAC ("Subscription Receipts") to be issued in connection with the concurrent private placement (the "Private Placement") as described below, by issuing 62.5 Sandwell shares in exchange for every MBAC common share held. The completion of the Transaction is subject to receipt of all requisite regulatory and shareholder approvals. Upon completion of the Transaction, MBAC will be a wholly-owned subsidiary of Sandwell and existing shareholders of MBAC will own approximately 97% of the issued and outstanding common shares of Sandwell.

Following completion of the Transaction, and subject to shareholder approval, Sandwell intends to change its name to MBAC Fertilizer Corp and will consolidate its issued and outstanding shares on the basis of one post consolidation share for every 15 pre-consolidation shares held.

About MBAC

MBAC is a Canadian private company that is focused on becoming a significant integrated producer of phosphate and potash fertilizer in the Brazilian market. In October 2008, MBAC indirectly acquired all of the quotas of Itafos Mineracao Ltda ("Itafos"), which holds a 100% interest in the Itafos phosphate mine and related infrastructure (the "Campos Belos Project"). MBAC has also recently expanded its property portfolio in Brazil with the acquisition of two potash exploration projects and one additional phosphate exploration project. MBAC is continuing to search for additional fertilizer opportunities in the Brazilian and other Latin-American markets. Strong agricultural fundamentals in Latin-America combined with unique opportunities in Brazil are expected to provide attractive growth opportunities for MBAC.

Updated Arraias-Campos Belos Project Mineral Resource Estimate

An updated preliminary resource estimate dated November 24th, 2009 for the Near Mine Block on the Arraias-Campos Belos Project was completed by MCB Servicos e Mineracao Ltda of Santa Amelia, Brazil for five (5) main phosphate deposit targets: Coite, Mateus, Juscelio, Sao Bento and Gaucho, all located in the city of Arraias, in the Tocantins state, between the cities of Campos Belos, in Goias State and Novo Alegre, in Tocantins State, Brazil. Total Measured and Indicated resources of 12,844,000 tonnes and total Inferred resources of 91,559,171 tonnes were estimated at an average grade of 5.23% P2O5 (see table below). Exploration of the adjacent Regional Mine Block is ongoing and no detailed resource estimates have yet been made.

Near Mine Block Mineral Resource Estimate(i)
Total Mineral Resources in the Near Mine Block are summarized in the following table:

TargetMeasuredIndicatedTotalInferred
Tonnes x 1000P2O5(%)Tonnes x 1000P2O5(%)Tonnes x 1000P2O5(%)TonnesP2O5(%)
Coite8398.69--8398.694,830,6895.23
Mateus9925.132,0795.143,0715.143,750,5375.23
Juscelino1,5315.07--1,5315.079,964,3915.23
Sao Bento--7845.957845.95441,0865.23
Gaucho--6,6194.796,6194.792,340,8245.23
Domingos------19,056,4715.23
Canabrava------12,764,6275.23
Cabecuda------38,370,5455.23
Total3,3625.999,4824.9612,8445.2391,559,1715.23

Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
(i) Cut-off grade of 3.5% of P2O5

The preliminary mineral resource estimate was prepared by Rogerio Moreno, (AusIMM), Principal Geologist, MCB Servicos e Mineracao Ltda of Santa Amelia, Brazil. The resource estimate was prepared in accordance with the requirements of National Instrument 43-101 ("NI 43-101") of the Canadian Securities regulators.

A total of 16,930 metres of HQ diamond drilling was completed in 418 drill holes on the Near Mine Block. Systematic drilling campaigns with regular grids ranging from 50 to 200 meters, combined with infill sampling and information from pits opened for trial mining, form the basis for Measured and Indicated Mineral Resources for the Arraias-Campos Belos project area that total 12.84 Mt @ 5.23% P2O5 based on a 3.5% lower cut-off-grade. So far, Measured and Indicated Resource areas account for some 4% of the known Near Mine phosphate system by area, whilst some 14% of the area has been condemned by means of systematic drilling. The remaining 82% of the Near Mine phosphate deposit area hosts Inferred Mineral Resources estimated at 91.56 Mt @ 5.23% P2O5.

Private Placement Financing

As announced on October 2, 2009, in connection with the Transaction, MBAC has accepted a term sheet from a syndicate led by Canaccord Capital Corporation together with Genuity Capital Markets and Wellington West Capital Markets (the "Agents") for a brokered private placement (the "Offering") of a minimum of 4,000,000 and a maximum of 4,800,000 Subscription Receipts at a price of C$12.50 per Subscription Receipt for gross proceeds of up to C$60,000,000. Each Subscription Receipt will entitle the holder thereof to acquire one common share of MBAC immediately prior to completion of the Transaction for no additional consideration. The closing of the Private Placement is expected to close on or about December 1, 2009 or such other dates as MBAC and the Agents may determine. Subject to the completion of the above noted financing assuming the maximum deal size, and post closing of the Transaction, the Company will have approximately C$87 million in cash, including approximately C$30 million that MBAC currently has available in its treasury. Prior to this financing and following the share consolidation mentioned above, the Company will have approximately 59.0 million shares outstanding, fully diluted. Assuming the maximum deal size is reached, the Company will have approximately 81.0 million shares outstanding, fully diluted.

Approval of RTO by Shareholders of Sandwell and MBAC

Sandwell intends to seek shareholder approval of, among other things, the issuance of common shares to holders of common shares of MBAC in connection with the Transaction at a special meeting (the "Meeting") of shareholders to be held at 10:00 a.m. (Vancouver time) on December 23, 2009. The Board of Directors of Sandwell has fixed the close of business on November 23, 2009 as the record date for the determination of holders of common shares of Sandwell entitled to notice of and to vote at the Meeting and any adjournments thereof.

MBAC intends to seek shareholder approval of the Transaction at a special meeting (the "Meeting") of shareholders to be held at 9:00 a.m. (Vancouver time) on December 23, 2009 at 2100-40 King Street West, Toronto, Ontario.

Technical and Scientific Information

The preparation of the technical and scientific content of this news release was supervised and approved of by Rogerio Moreno, Principal Geologist with MCB Servicos e Mineracao Ltda. Mr. Moreno is a professional geologist registered with the Australian Institute of Mining and Metalurgy (AusIMM) and is a Qualified Person (QP) as defined by NI 43-101.

TSXV

Completion of the Transaction is subject to a number of conditions, including without limitation; TSX Venture Exchange (the "TSXV") approval and the approval of shareholders of MBAC and Sandwell. The Transaction cannot close until the required approvals are obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular to be prepared by Sandwell in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Sandwell Mining Ltd. should be considered highly speculative.

ON BEHALF OF THE BOARD

SANDWELL MINING LTD.

Blair Murdoch, President and CEO

Cautionary Statement Regarding Forward-Looking Information

This press release contains "forward-looking information" within the meaning of applicable Canadian legislation, concerning the business, operations and financial performance and condition of MBAC and Sandwell. Forward-looking information includes, but is not limited to statements with respect to the anticipated dilution of shareholders of Sandwell upon completion of the Transaction; statements with respect to anticipated developments in MBAC's operations in future periods; planned exploration and development activities; the adequacy of MBAC's financial resources and other events or conditions that may occur in the future; estimated production; the ability of MBAC to continue to create value for its shareholders; the future price of raw materials and phosphate; the estimation of mineral resources; the realization of mineral resource estimates; the timing and amount of estimated future production; costs of production; costs and timing of completion of upgrades at the Campos Belos Project to build the sulphuric acid and granulation plants needed to produce SSP; capital expenditures; permitting time lines and permitting, mining or processing issues; currency exchange rate fluctuations; government regulation of mining operations; information concerning the interpretation of drill results; success of exploration activities; environmental risks; unanticipated reclamation expenses; title disputes or claims; and limitations on insurance coverage. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled estimates", "forecasts", "intends", "anticipates", "does not anticipate", or "believes", or variations of such words and phrases or statement that certain actions, events or results "may", "could", "would", "might", "will" or "will be taken", "occur", or "be achieved". Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made, and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of MBAC and Sandwell to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: unexpected events during construction, expansion and operation; variations in grade and tonnes mined; delay or failure to receive board or government approvals; timing and availability of external financing on acceptable terms; risks related to international operations; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of commodities; possible variations in resource, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; political unrest and insurrection; acts of terrorism; accidents, labour disputes and other risks of the mining industry; delays in the completion of development or construction activities, as well as those factors discussed herein. Although management of Sandwell has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. Sandwell does not undertake to update any forward-looking statements that are incorporated herein, except in accordance with applicable securities laws.

Neither MBAC nor Sandwell has completed a feasibility study to support any improvements or upgrades at the Campos Belos Project. It is uncertain at this time whether any upgrades or improvements will be found to be economical.

Information Relating to the United States

This press release does not constitute an offer of securities for sale in the United States. The securities being offered have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from U.S. registration requirements.

The TSXV has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the contents of this press release. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Sandwell Mining Ltd.
    Blair Murdoch
    President and CEO
    604-925-2010