LionOre Mining International Ltd.

LionOre Mining International Ltd.

August 18, 2006 10:42 ET

LionOre Completes Sale of Australian Nickel Exploration Assets to Breakaway Resources

TORONTO, ONTARIO--(CCNMatthews - Aug. 18, 2006) - LionOre Mining International Ltd. ("LionOre"), (TSX:LIM)(LSE:LOR)(ASX:LIM)(BSE:LIONORE) announces the completion of the sale of certain non-strategic Australian nickel exploration assets to Breakaway Resources Limited ("Breakaway") for a total consideration of A$10.5 million (US$7.6 million). This comprises 4.8 million shares in Breakaway and the issue of a series of new unsecured redeemable converting notes with a face value of A$9 million.

As required under the terms of the sale, LionOre has converted a series of existing converting notes with a face value of A$3.5 million resulting in the issue to LionOre of a further 15.56 million shares in Breakaway.

The assets being sold consist of greenfield nickel exploration tenements located in the Northeastern Goldfields and East Kimberley regions of Western Australia. LionOre retains prospective nickel tenements surrounding its own operations, as well as at Forrestania and Honeymoon Well.

LionOre will be granted a right to toll treat, process and purchase nickel bearing material derived from the assets being sold and a "buy-back right" to purchase an interest in any "major discovery" made on the assets being sold. A "major discovery" is a discovery with a total reserve in excess of 125,000 tonnes of contained nickel. The interest that LionOre will be able to purchase on the exercise of its buy-back right will be up to 51% of Breakaway's interest in the major discovery. The consideration payable by LionOre to exercise a buy-back right will be 4 times the expenditure incurred on the discovery to reach the reserve status multiplied by the percentage interest being acquired by LionOre.

Contact Information

  • UK / Europe
    LionOre Mining
    Colin Steyn
    President & CEO
    +44 (0)20 7590 8888
    LionOre Mining
    Ted Mayers
    Chief Financial Officer
    +1 (416) 777-1670
    LionOre Australia
    Glenn Jardine
    Managing Director
    +61 (0)8 9426 0100
    LionOre Mining International Ltd.
    20 Toronto Street, 12th Floor,
    Toronto, Ontario M5C 2B8 Canada
    +1 (416) 777-1985
    +1 (416) 777-1320 (FAX)