Minefinders Corporation Ltd.

Minefinders Corporation Ltd.

October 18, 2006 20:06 ET

Minefinders Enters Into Agreement to Sell Privately US$75 Million in 4.5% Convertible Senior Notes

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Oct. 18, 2006) - Minefinders Corporation Ltd. (the "Company") (TSX:MFL)(AMEX:MFN) announced today that it has entered into a purchase agreement with an initial purchaser to issue and sell US$75 million (US$85 million if the over-allotment option granted to the initial purchaser is exercised in full) aggregate principal amount of its Convertible Senior Notes due December 15, 2011 ("Convertible Notes").

The offering represents net proceeds to the Company of US$72.375 million, before expenses related to the offering (US$82.025 million if the over-allotment option is exercised in full). The Convertible Notes are being offered and sold at their stated principal amount (US$1,000 per Convertible Note) and will have a semi-annual cash interest coupon of 4.5% per year.

The offering is currently expected to close on October 24, 2006, subject to the satisfaction of customary closing conditions and approval from the Toronto Stock Exchange and the American Stock Exchange.

The net proceeds of the offering, together with cash on hand, will be used primarily for the construction, start-up, and operation of the Company's proposed Dolores gold and silver mine in Mexico.

Each Convertible Note will be convertible at the option of the holders into 91.9118 Common Shares, subject to adjustment, representing an initial conversion price of approximately US$10.88 per Common Share or 36% above the closing sale price of the Company's Common Shares on the American Stock Exchange on October 18, 2006.

The Convertible Notes will not be redeemable prior to maturity, except upon the occurrence of certain changes to Canadian tax laws.

The Convertible Notes will rank equally in right of payment with all of the Company's existing and future unsecured senior debt and are senior in right of payment to all our future subordinated debt. The indenture does not limit the amount of debt that the Company or its subsidiaries may incur. The Convertible Notes will effectively rank junior to any of the Company's secured indebtedness to the extent of the value of the assets securing such indebtedness. In meeting the conversion terms of these securities, the Company will have the right to satisfy these obligations using its Common Shares, cash, or a combination of its Common Shares and cash.

Although the secured project debt facility announced by the Company on December 19, 2005 remains a viable option, the Company decided to pursue the Convertible Note offering based upon considerations such as interest rate, absence of requirements to forward sell future production and other factors considered by the Company.

This announcement does not constitute an offer to sell, nor is it a solicitation of an offer to buy, securities. Any offers of the securities will be made only by means of a private offering circular. The Convertible Notes, and the Common Shares issuable upon conversion of the Convertible Notes, have not been registered under the Securities Act of 1933, as amended, or the securities laws of any other jurisdiction, and may not be offered or sold in the United States without registration under, or an applicable exemption from, the registration requirements of the Securities Act. None of these securities are being offered or sold in Canada or to Canadian purchasers or to any person who is purchasing for resale to, or for account of, any person resident in Canada.

Mark H. Bailey, President and Chief Executive Officer

This news release contains forward-looking statements regarding the Company, its financing arrangements, its planned use of proceeds and other matters, including the Company's expectations that the offerings will be successfully completed consistent with the terms outlined above. Actual results and developments may differ materially from those contemplated by these statements depending on, among others, satisfaction of customary closing conditions which may be affected by market conditions and global political developments.

Contact Information

  • Minefinders Corporation Ltd.
    Mark H. Bailey
    President and Chief Executive Officer
    (604) 687-6263 or Toll Free: 1-866-687-6263
    (604) 687-6267 (FAX)
    Website: www.minefinders.com