North American Tungsten Corporation Ltd.
TSX VENTURE : NTC

North American Tungsten Corporation Ltd.

March 05, 2008 16:42 ET

North American Tungsten Announces Private Placement of $19.4 Million at a 36.7% Premium and Strategic Agreement With Hunan Nonferrous Metals Corporation

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 5, 2008) - North American Tungsten Corporation Ltd. (TSX VENTURE:NTC) ("NTC" or "the Company") is pleased to announce that China's largest nonferrous metals producer, Hunan Nonferrous Metals Corporation (HSE:2626) ("Hunan Nonferrous"), will acquire approximately 13.4 million units of NTC at a price of $1.45 per unit on a private placement basis as part of a Strategic Alliance Agreement. This price represents a 36.7% premium to NTC's 10 day volume weighted average trading price and will raise approximately $19.4 million for development of the Mactung tungsten project in Yukon, subject to approval of the TSX Venture Exchange.

Each unit is comprised of one common share and one common share purchase warrant that will allow Hunan Nonferrous to purchase one common share at $3.00 per share for a period of 18 months from the date of closing. The warrant price represents a 183% premium over NTC's 10 day volume weighted average trading price.

Stephen Leahy, CEO of NTC, stated, "We are pleased that the strategic nature and value of the Company's world class Mactung tungsten development project has been validated by an investment of this scale by Hunan Nonferrous, which is a world leader in tungsten mining and processing and has a market capitalization of approximately $1.8 billion.

This investment will help advance the development of Mactung which is due to have a Feasibility Study completed in calendar Q3/08."

Upon closing of the private placement Hunan Nonferrous will own approximately 9.9% of the issued and outstanding shares of NTC. The key terms of the key terms of the Strategic Alliance Agreement include:

1) Board Seat: Hunan Nonferrous will be entitled to nominate a board member to the Company's Board of Directors as long as Hunan Nonferrous maintains a minimum threshold of 9% of the issued and outstanding common shares of NTC ("Threshold Ownership").

2) Pro-Rata Financing: Provided that Hunan Nonferrous maintains its Threshold Ownership prior to any new issuance of NTC common shares (or securities convertible for NTC common shares) NTC will give Hunan Nonferrous the right to purchase and match Hunan Nonferrous' beneficial ownership prior to the issuance.

3) Standstill: Hunan Nonferrous is subject to one year standstill period whereby Hunan Nonferrous cannot purchase any NTC common shares other than under certain pre-specified circumstances including the Pro-Rata Financing provision or with the prior consent of NTC.

4) Hold Period: Hunan Nonferrous will be restricted from the transfer or sale of any NTC common shares or warrants for a period of one year, except under certain pre-specified circumstances, including tendering into a takeover bid.

5) Right to Match on Mactung: Provided that Hunan Nonferrous maintains its Threshold Ownership of NTC common shares, if NTC intends to proceed with a transaction that will result in (a) the establishment of a separate project entity with a Third Party for the purposes of the development of the Mactung Property or (b) the financing of the development of the Mactung Property by a Third Party concurrent with committing to off-take arrangements for the Mactung Property with the same Third Party, NTC will offer Hunan the right to match the proposed Transaction on the same terms as the Third Party.

The transaction is expected to close within 30 days and is subject to certain conditions including the receipt of all necessary regulatory approvals, including the approval of the TSX Venture Exchange.

CIBC World Markets acted as financial adviser to Hunan Nonferrous and Baker Mackenzie LLP is Hunan Nonferrous legal adviser.

Haywood Securities Inc. acted as financial adviser to NTC and Fraser Milner Casgrain LLP is its legal adviser.

North American Tungsten would like to acknowledge the support they received from the Yukon government's Department of Economic Development in advancing this transaction.

ABOUT HUNAN NONFERROUS METALS CORP.

Hunan Nonferrous is the largest integrated producer of nonferrous metals, excluding aluminum, in China as measured by production volume. Its major products include tungsten, zinc, antimony and lead, and compounds, alloys and other products derived from these metals. Hunan Nonferrous controls the largest tungsten and bismuth reserves in the world and also substantial reserves of antimony. The agreement reached with North American Tungsten becomes Hunan Nonferrous Metals Corporation's third significant foreign strategic investment following the recently concluded strategic agreements reached with Compass Resources NL (ASX:CMR) and King Island Scheelite Ltd (ASX:KIS).

ABOUT NORTH AMERICAN TUNGSTEN CORPORATION LTD.

The Company is a publicly listed Tier 1 Junior Resource Company engaged primarily in the operation, development, and acquisition of tungsten and other related mineral properties in Canada. The Company's 100% owned Cantung mine and Mactung development project make it one of the few tungsten producers with both a producing mine and strategic development asset in the western world. Mactung is one of the world's largest known undeveloped high grade tungsten-skarn deposits.

ON BEHALF OF THE BOARD OF DIRECTORS

Stephen M. Leahy, Chairman & CEO

Cautionary Note: The Company relies upon litigation protection for "forward-looking" statements.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • North American Tungsten Corporation Ltd.
    Toni Williamson
    Corporate Geologist
    (604) 684-5300
    (604) 684-2992 (FAX)
    Email: info@natungsten.com