Magma Metals Limited
TSX : MMW
ASX : MMW

Magma Metals Limited

December 03, 2009 09:44 ET

Magma Metals Announces Terms of Equity Financing

WEST PERTH, WESTERN AUSTRALIA--(Marketwire – Dec. 3, 2009) –

NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Magma Metals Limited (TSX:MMW)(ASX:MMW) ("Magma Metals" or the "Company") announced today that it has finalized the terms of its previously announced public offering. Magma intends to enter into an underwriting agreement with a syndicate of underwriters led by CIBC, and including Cormark Securities Inc., GMP Securities L.P. and Dundee Securities Corporation (collectively, the "Underwriters") to sell 18.5 million ordinary shares of the Company (the "Shares") at a price of C$0.63 per Share to raise gross proceeds of C$11,655,000 (the "Offering"). Additionally, Anglo American Investments (Australia) Limited ("Anglo") has agreed to subscribe for 2.5 million shares on a private placement basis at the same price as the Offering. The Shares of Magma Metals are being offered by way of a short form prospectus in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Nova Scotia and New Brunswick. All shares issued pursuant to the Offering and Placement will be made using Magma's 15% placement capacity under ASX listing rule 7.1.

Magma intends to use the net proceeds of the Offering to continue exploration and development activities at the Company's Thunder Bay North property and for general corporate purposes.

The Offering is scheduled to close on or about December 17, 2009 (Toronto Time) and is subject to certain customary conditions and regulatory approvals, including the entering into by the Company and the underwriters of an underwriting agreement and the approval of the Toronto Stock Exchange and the Australian Stock Exchange.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States or any other jurisdiction outside of Canada, nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The Shares offered have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "1933 Act"), or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the 1933 Act and applicable state securities laws.

The preliminary short form prospectus relating to the Offering has been filed with securities commissions or similar authorities in each of the provinces and territories of Canada, other than Quebec. The preliminary prospectus is still subject to completion or amendment. Copies of the preliminary prospectus may be obtained upon request without charge from CIBC. A copy of the preliminary prospectus may also be obtained on SEDAR (www.sedar.com). There will not be any sale or any acceptance of an offer to buy the securities until a receipt for the final prospectus has been issued.

Cautionary Note Regarding Forward-Looking Statements and Information

This news release contains "forward-looking information" within the meaning of applicable securities legislation. Where statements by Magma express or imply an expectation or belief as to future events, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, forward-looking information involves risks, uncertainties and other factors that may cause actual results to be materially different from those implied by such forward-looking information. There can be no assurance that the Offering or the private placement will close or that they will close in the time frame indicated above. Among other factors, conditions and regulatory approvals must be met or obtained. Any use of proceeds from the offering and private placement may be altered if there are sound business reasons to do so.

ABN 72 114 581 047

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