Alhambra Resources Ltd.
TSX VENTURE : ALH
PINKSHEETS : AHBRF
FRANKFURT : A4Y

Alhambra Resources Ltd.

September 13, 2012 08:30 ET

Alhambra Resources Ltd. Announces MINT Waives Its Pre-Emptive Right to Participate in Financings

CALGARY, ALBERTA--(Marketwire - Sept. 13, 2012) - Alhambra Resources Ltd. (TSX VENTURE:ALH)(PINKSHEETS:AHBRF)(FRANKFURT:A4Y) ("Alhambra" or the "Corporation"), an international gold explorer and producer, announces that the Corporation has received formal notification from the Government of Kazakhstan's Ministry of Industry and New Technology ("MINT") that MINT will waive its pre-emptive right to participate in anticipated future financings under the terms and conditions of Alhambra's application.

MINT granted the Corporation its approval to issue two tranches of common shares and/or equity derivative instruments. The first approved tranche is an equivalent of up to 40 million common shares at a price between US$0.60 to US$2.00 per share, and the second approved tranche, by way of a dual-primary listing of up to 120 million common shares at a price between US$1.25 to US$4.00 per share.

At the time of the original MINT application, the requested financing terms were within the context of the Corporation's actual share price trading range. The range of the price terms requested were broad to provide flexibility for Alhambra's management to negotiate and secure financing at the best available terms and to take advantage of a potentially buoyant future capital market. The anticipated financings were to support Alhambra's objectives of exploiting the potential of its significant exploration license by accelerating exploration and production development activities to increase resources, reserves and gold production.

Over the last eighteen months, given the extremely poor junior capital market, combined with the longer than anticipated MINT approval process time, the Corporation's share price declined significantly. Although the Corporation's share price is currently below the approved MINT pricing, Alhambra has been negotiating a financing scenario which would meet the terms of the MINT approval. A non-binding term sheet has been executed which will form the basis for negotiating a final agreement.

Stated John J. Komarnicki, Chairman and Chief Executive Officer of Alhambra Resources Ltd., "We are very pleased to have finally received the pre-emptive waiver from MINT. It is unfortunate however that the trading price of Alhambra's stock declined below $0.60 during the period in which MINT was considering the Corporation's application. Based on independent assessments, Alhambra's intrinsic value greatly exceeds the current stock price and we believe that a financing should be able to be completed within the parameters of the MINT approval. Upon successful completion of a financing we anticipate being able to proceed with the acceleration of exploration and production development of Alhambra's gold mineral license."

Under the Kazakhstan Subsoil and Subsoil Use Act, MINT's pre-emptive right waiver is effective for a six month period. If Alhambra does not complete a financing within this period, the Corporation must apply to MINT for an extension. The Corporation understands that an extension application, if required, should be obtained in a more reasonable time frame.

In addition, the Corporation issued a news release on February 1, 2012 announcing that it had received regulatory body approval to further extend the expiry date of 2,500,450 share purchase warrants of the Corporation having an exercise price of $0.45 per common share (the "Warrants"). This requested extension was made to give the Corporation the time to obtain the required waiver and approval from MINT for the issuance of common shares of Alhambra upon exercise of the Warrants. The new Warrant expiry date is the earlier of February 11, 2013, or, sixty days after receipt of a waiver of right of first refusal and consent from MINT, in respect of the issuance of common shares upon exercise of Warrants. The Corporation received MINT's consent on September 11, 2012. Hence, the expiry date of the Warrants will be November 10, 2012.

BACKGROUND

The Subsoil and Subsoil Use Act (the "Act") in Kazakhstan grants the Government of Kazakhstan the first right of refusal to purchase any direct or indirect interest in any subsoil license or legal entity holding that license or the legal entity controlling the holder of the subsoil use license at market prices should the license or shares or instruments convertible or giving rights to shares (joint, the "Subsoil Use Assets") come up for sale.

As a result, before a company can accept an offer to sell its Subsoil Use Assets, it must first obtain approval from relevant Kazakhstan authorities. The Act extends this obligation to require a company whose main business is connected with subsoil use in Kazakhstan to get approval should it desire to issue any common shares or issue any derivative instruments that are convertible into common shares.

In 2011, the Corporation completed, filed and amended an application with the relevant Kazakhstan agency to have pre-approved, any shares that may be issued upon conversion of outstanding warrants and options as well as requested that the Government of Kazakhstan pre-approve a private placement that the Corporation would contemplate doing in the near future to finance its exploration and development activities.

ABOUT ALHAMBRA

Alhambra is a Canadian based international exploration and gold production corporation with NI 43-101 gold resources as per ACA Howe International UK and Micromine Consulting Services UK as noted below:

Measured (M) Indicated (I) M + I Inferred
Project Grade Grade Grade Grade
Tonnes (g/t) Ounces Tonnes (g/t) Ounces Tonnes (g/t) Ounces Tonnes (g/t) Ounces
Uzboy (1) 14,317,200 1.52 700,000 7,009,500 1.22 275,500 21,326,700 1.42 975,500 11,258,200 1.17 421,700
Dombraly (2) - - 559,000 1.22 22,000 559,000 1.22 22,000 9,317,000 1.01 301,000
Shirotnaia (3) - - 2,900,000 0.76 71,000 2,900,000 0.76 71,000 34,577,000 0.58 645,000
TOTAL 14,317,200 1.52 700,000 10,468,500 1.09 368,500 24,785,700 1.34 1,068,500 55,152,200 0.77 1,367,700

(1) Effective as of Dec 31/07 as per ACA Howe per news release dated Apr 8/08 at a 0.40 g/t cut-off.

(2) Effective as of Nov 27/11 as per ACA Howe per news release dated Feb 7/12 using natural cut-off grades of 0.13 g/t, 0.1 g/t and 0.2 g/t for the low grade stockpile, pit infill and in-situ mineralized zones respectively.

(3) Effective as of Jan 9/12 as per ACA Howe per news release dated Feb 28/12 using cut-off grades of 0.1 g/t for oxide gold mineralization and 0.2 g/t for transitional and primary gold mineralization respectively.

Alhambra holds exploration and exploitation rights to a 2.4 million acre (9,800 km2), 100% owned license called the Uzboy Project, located in the Northern Kazakhstan Metallogenic Province which hosts numerous world-class gold deposits. Over 100 mineral targets, including three advanced exploration areas, are contained within the Uzboy Project.

Alhambra common shares trade in Canada on The TSX Venture Exchange under the symbol ALH, in the United States on the Over-The-Counter Pink Sheets Market under the symbol AHBRF and in Germany on the Frankfurt Open Market under the symbol A4Y. The Corporation's website can be accessed at www.alhambraresources.com.

Forward-Looking Statements

Certain statements contained in this news release constitute "forward-looking statements" as such term is used in applicable Canadian and US securities laws. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. In particular, finalizing the details of a financing scenario within six months of MINT approval, and other factors and events described in this news release should be viewed as forward-looking statements to the extent that they involve estimates thereof. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects" or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans, "estimates" or "intends", or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved) are not statements of historical fact and should be viewed as "forward-looking statements". Such forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Corporation to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks and other factors include, finalizing the details of a financing scenario within six months of MINT approval; political, social and other risks inherent in carrying on business in a foreign jurisdiction and such other business risks as discussed herein and other publicly filed disclosure documents. Although the Corporation has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or 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 vary or differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements contained in this news release.

Forward looking statements are made based on management's beliefs, estimates and opinions on the date the statements are made and the Corporation undertakes no obligation to update forward-looking statements and if these beliefs, estimates and opinions or other circumstances should change, except as required by applicable law.

This news release contains forward-looking statements based on assumptions, uncertainties and management's best estimates of future events. When used herein, words such as "intended" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on assumptions by and information available to the Corporation. Investors are cautioned that such forward-looking statements involve risks and uncertainties. Actual results may differ materially from those currently anticipated. The forward-looking statements contained herein are expressly qualified by this cautionary statement.

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

Contact Information

  • Alhambra Resources Ltd.
    Ihor P. Wasylkiw
    VP & Chief Information Officer
    +1 (403) 508-4953

    Alhambra Resources Ltd.
    John J. Komarnicki
    Chairman & CEO
    +1 (403) 228-2855