Ivernia Inc.

Ivernia Inc.

May 12, 2011 18:28 ET

Ivernia Announces Financing Arrangements

TORONTO, ONTARIO--(Marketwire - May 12, 2011) -

All dollar amounts in this release are expressed in Canadian Dollars

Ivernia Inc. (TSX:IVW) ("Ivernia" or the "Company") today announced that it has entered into an agreement with Green SEA Resources Inc. (the "Purchaser") pursuant to which the Purchaser has agreed to purchase 93,370,682 Ivernia common shares ("Common Shares"), which represents approximately 16% of the issued and outstanding Common Shares of the Company (as at the date hereof), at a price of $0.2142 per Common Share (the "Offering") for gross proceeds of approximately $20 million. The private placement may include certain institutional and other accredited investors that, if they choose to participate in the Offering, would result in the Purchaser's participation being reduced to a minimum of 44,571,721 Common Shares. In consideration for the Purchaser agreeing to purchase the full amount of the Offering (assuming no other investors participate), the terms of the Offering provide that the Purchaser will also be paid a commitment fee of $1 million, equating to $0.01071 per Common Share if the maximum amount of shares are purchased (resulting in a net price of $0.20349 per Common Share) or equating to $0.02244 per Common Share if the minimum amount of shares are purchased (resulting in a net price of $0.19176 per Common Share), to be deducted from the gross proceeds of the Offering with the result that the Company will receive approximately $19 million in net proceeds. The Offering will be completed by way of a non-brokered private placement and, subject to required Toronto Stock Exchange ("TSX") approvals, is expected to close on or before May 27, 2011.

As described in Company press releases dated April 5, 2011, and April 7, 2011, Magellan Metals Pty Ltd ("Magellan Metals"), a wholly owned subsidiary of the Company, voluntarily halted all operations at the Magellan Mine and placed it under care and maintenance. Magellan Metals continues to undertake a comprehensive end-to-end review of all its activities related to the Magellan Mine, including the mining, processing, transporting and management of lead carbonate production and export. Magellan Metals is also continuing its investigation into the source and extent of the lead-bearing mud found on certain shipping containers that precipitated the shutdown of mining operations. As noted in the April 5, 2011 press release, there is no suggestion the source of the lead is from the bagged lead carbonate concentrate within the shipping container, which is consistent with previous sampling results along the transport route, and there is no risk to public safety.

The Company cannot, at this time, provide any further guidance on when the Company will restart operations at the Magellan Mine. The Company has been advised by its financial and Australian legal advisors that Magellan Metals requires certainty of funding immediately. The proceeds of the Offering will be used to strengthen Ivernia's financial position generally and specifically to provide working capital to fund Magellan Metals during the care and maintenance of the Magellan Mine. The Offering has been negotiated in response to these urgent developments and is expected to close on or before May 27, 2011 which will be less than 21 days from the date hereof in order to provide Magellan Metals with the certainty of funding it requires and to strengthen Ivernia's financial position.

The Purchaser and its affiliates, currently hold, to the best of Ivernia's knowledge, 277,947,928 Common Shares, or approximately 47.74% of Ivernia's outstanding Common Shares (the "Purchaser's Shares"). Assuming the Purchaser is the only subscriber in the Offering, following the Offering the Purchaser and its affiliates would, to the best of the Company's knowledge, collectively own 371,318,610 Common Shares or approximately 54.96% of Ivernia's outstanding Common Shares. As a result, the Offering could have an effect on control of Ivernia. In addition, the Offering will constitute a "related party transaction" pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"). However, the Offering will be exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 as neither the fair market value of the Common Shares issued nor the consideration paid for the Common Shares will exceed 25% of the Company's market capitalization. The maximum dilution calculated on a pre-closing basis under the Offering will be approximately 16.04%.

Under the rules of the TSX, the Offering requires shareholder approval as the Offering would result in greater than 10% of the issued and outstanding share capital of the Company being issued to insiders during the preceding six month period. The Company has made application to the TSX under the provisions of Section 604(e) of the TSX Company Manual for an exemption from its requirement for shareholder approval of the Offering on the basis that the Company is in serious financial difficulty. A special committee of the Company's board of directors, comprised of two directors who are neither officers or directors of the Purchaser or any of its affiliates, considered the reasonableness and fairness of the Offering and it unanimously recommended to the Company's full board of directors that the Offering be approved. The board of directors subsequently approved the Offering (the members of the board that would be considered interested parties having declared their interests and abstaining from voting on the resolution approving the Offering) and there was no contrary view or abstention by any independent director on the resolution approving the Offering. In addition both the special committee and the Company's full board of directors determined that the Company meets the applicable TSX and MI 61-101 financial hardship requirements, that the financing is reasonable in the circumstances and is designed to improve the Company's financial situation. Without the proceeds of the Offering, Ivernia believes that it will be unable to meet all future financial commitments of its wholly-owned subsidiary, Magellan Metals, and, as a result, Magellan Metals could find itself insolvent by the end of May 2011.

As a consequence of relying upon the TSX financial hardship exemption, the TSX has informed the Company that it will, in the ordinary course, commence a de-listing review. Management of the Company believes that, upon completion of the transactions described above, it will be in compliance with TSX continued listing requirements.

The Company has received written approvals of the Offering from two institutional shareholders of the Company that have advised the Company that they will not participate in the Offering (the "Consenting Shareholders"). These Consenting Shareholders own or control approximately 16.79% of the Company's outstanding shares or approximately 32.12% of the outstanding shares held by disinterested shareholders for the Offering. The Company will continue to seek the written consents of other disinterested shareholders for the Offering which excludes the Purchaser's Shares. In the event that the Company can secure the written consents of shareholders representing more than 50% of the shares held by disinterested shareholders prior to closing, the TSX has advised the Company that it would not require the Company to rely on the financial hardship exemption and the TSX would not initiate a de-listing review.

Paradigm Capital Inc. and Stikeman Elliott LLP are Ivernia's financial and Canadian legal advisors, respectively, regarding the Offering.

About Ivernia:

Ivernia is an international base metal mining company and the owner of the Magellan Mine, located in Western Australia.

Ivernia trades under the symbol "IVW" on the TSX. Additional information on Ivernia is available on the Company's website at www.ivernia.com and at SEDAR at www.sedar.com.

Forward-Looking Statements

Certain statements contained in this news release constitute forward-looking information within the meaning of securities laws. All statements included herein (other than statements of historical facts) which address activities, events or developments that management anticipates will or may occur in the future are forward-looking statements, including statements as to the timing of the closing of the Offering, the receipt of regulatory approval to close the Offering, the duration of the suspension of the Company's transportation of lead carbonate from the Magellan Mine, the duration of the care and maintenance period of the Magellan Mine and other such matters. Forward looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "contemplate", "target", "believe", "plan", "estimate", "expect", and "intend" and statements that an event or result "may", "will", "can", "should", "could" or "might" occur or be achieved and other similar expressions. These statements are based upon certain reasonable factors, assumptions and analyses made by management in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors management believes are appropriate in the circumstances.
However, whether actual results and developments will conform with management's expectations is subject to a number of risks and uncertainties, including factors underlying management's assumptions such as duration of the suspension of the transportation of lead carbonate, the duration of the care and maintenance period, regulatory compliance and approvals, matters relating to ramping up mining and milling throughput and operations, metal price volatility, lead carbonate concentrate treatment charges, exchange rates, regulatory proceedings and litigation, the fact that the Company has a single mineral property, resources and reserves, health and safety, environmental factors, mining risks, metallurgy, labour and employment regulations, government regulations, insurance, dependence on key personnel, constraints on cash flow, the nature of mineral exploration and development, matters related to the order to cease transport of lead concentrate and matters relating generally to the transportation of lead carbonate; matters related to the Esperance settlement and shipments through the Port of Fremantle; implications stemming from the Esperance inquiry; and common share price volatility and the dilution of the Company's common shares. Additional factors are discussed in the Company's Annual Information Form dated as of
March 30, 2011 and in other documents filed from time to time by Ivernia with Canadian securities regulatory authorities. While Ivernia considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. These factors may cause the actual results of the Company to differ materially from those discussed in the forward-looking statements, and there can be no assurance that the actual results or developments anticipated by management will be realized or, even if substantially realized, that they will have the expected results on the Company. Undue importance should not be placed on forward-looking information nor should reliance be placed upon this information as of any other date. Except as required by law, while it may elect to, Ivernia is under no obligation and does not undertake to update this information at any particular time.

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