First Metals Inc.

First Metals Inc.

May 07, 2007 09:15 ET

First Metals Inc. Announces Closing of $20,000,000 Term Debt Financing

Offering Fully Sold

TORONTO, ONTARIO--(CCNMatthews - May 7, 2007) - First Metals Inc. ("First Metals" or the "Company") (TSX:FMA) is pleased to announce today that it has completed an offering (the "Offering") of $20,000,000 principal amount of 14% senior secured notes (the "Notes") of the Company. The Offering was led by Jennings Capital Inc. ("Jennings").

The proceeds from the sale of the Notes will be used to complete underground development at the Fabie Bay Copper Mine near Rouyn-Noranda, Quebec, refurbishment of the Horne Mill pursuant to the terms of the previously announced letter of intent between the Company and Xstrata Copper Canada ("Xstrata") and for general working capital purposes.

Each Note, which has a term of five (5) years and one (1) day, was offered at a purchase price of 98% of the principal amount thereof and is callable by the Company at any time following 24 months from the closing. In addition, for each $1,000 in principal amount of Notes acquired, the Note purchasers also received, for no additional consideration, a share purchase warrant to acquire a total of one hundred common shares of the Company at an exercise price of $1.35 per share expiring five (5) years and one (1) day from the date the Escrow Release Conditions (as defined below) are met. This represents a total of 2 million share purchase warrants. Jennings is receiving a $400,000 advisory fee and a 4% cash commission for services rendered in connection with the Offering.

Pursuant to the terms of the Notes, $3,000,000 of the proceeds of the Offering were immediately released to the Company. The balance of the proceeds, net of the costs of the Offering, will be held in escrow pending the achievement of certain milestones by the Company, including the receipt of the mining license (baille miniere) from the direction des titres miniers of the Province of Quebec and the completion of the custom milling agreement. Both of these items are well underway and are expected to be finalized this month.

"Over the course of one year", stated Chairman and C.E.O. James Beatty, "we have successfully completed an IPO on the TSX, staffed, permitted, erected the surface plants, brought power to the site and negotiated an off-take agreement." He went on to state that: "With all of these essential elements in place, this financing represents the final component for achieving production. The funds raised allow the mill to be refurbished, underground development to proceed and receivables to be financed until cash-flow is achieved. We are extremely pleased to have been able to accomplish this with minimal dilution to our shareholders. We anticipate achieving profitability in short order and, at current copper prices, being very profitable."

First Metals is a development company currently focused on the Fabie Bay and Magusi River Copper, Zinc, Gold and Silver Projects, near Rouyn-Noranda, Quebec, Canada acquired from Globex Mining (TSX:GMX) Enterprises Inc. in 2006. The Company has approximately 30.9 Million shares issued and outstanding and is listed on the Toronto Stock Exchange.

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