SOURCE: EMED Mining Public Limited

February 06, 2012 03:28 ET

Proposed Subscription, Support and Arrangements

NICOSIA, CYPRUS--(Marketwire - Feb 6, 2012) -


AIM: EMED TSX: EMD                                     6 February 2012

Proposed Subscription, Cost Overrun Support and Off-take Arrangements
                    with Cornerstone Customer



EMED Mining Public Limited ("EMED Mining" or "the Company"), the
Europe-based minerals development and exploration company, is pleased
to announce that the Company and one of its subsidiaries have entered
into conditional agreements with a cornerstone customer Yanggu
Xiangguang Copper Co. Ltd ("XGC") for an aggregate funding package of
US$30 million (intended as to half in the form of share capital and
half in the form of a future standby debt facility) in exchange for a
10% ordinary equity position in EMED Mining (on a fully-diluted basis)
and the grant of limited off-take rights over the Rio Tinto Mine's
copper production.

Highlights of transaction with XGC



* XGC to provide $15 million equity by way of a subscription for
new ordinary shares in the Company at a price of 9 pence per share (or
approximately US$0.14) (the "Subscription").

* XGC to conditionally agree to provide or arrange a $15 million
subordinated debt facility as required by the providers of senior debt
finance (who will be providing the senior debt for the purposes of the
restart of operations of the Rio Tinto Mine) (the "Cost Overrun
Support").

* The Company's subsidiary, EMED Marketing Limited ("EMED
Marketing") has granted XGC off-take rights over 25% of current
reported copper reserves, at market prices.

* XGC would complement the existing strong international
shareholder base dominated by European, North American and Australian
shareholders.



Further information on the transaction with XGC and the related
agreements between the parties are set out below.



Highlights of Concurrent Activities



* The Company is also in advanced discussions with potential
project financiers with a view to finalising a mandate in respect of
the provision of project debt of $175 million.

* The agreements with XGC together with the project finance
negotiations represent part of the planned finance, hedging, bonding
and insurance package for the start-up funding of the Rio Tinto Mine,
subject to a number of conditions including Spanish regulatory
approvals and shareholder approval.

* Discussions continue with the regulatory authorities in
Andalucia, Spain on the various permits required to start project works
at the end of 2012 and production to start in 2013. As part of the
project preparations, EMED Mining has ensured that the Andalucian
Government has also met most of the Company's carefully assembled set
of large shareholders including XGC.

In relation to the potential mandate to project financiers, the Company
is in advanced detailed discussions with a number of leading global
financial institutions and a further announcement is expected to be
made on this in due course. The quantum of $175 million caters for
previously reported project capital estimates supplemented by
contingency provisions for the expanded land footprint agreed with the
Andalucian Government, anticipated revisions in equipment
specifications or prices, foreign exchange movements and working
capital buffers. A detailed break-down will be updated and reported in
due course when the conditions of regulatory permitting are confirmed
and detailed engineering and procurement can be finalised.

As regards the regulatory permitting of our plans for the Rio Tinto
Mine, the Company is in frequent and intense discussions with the
Andalucian Government, which has also referred some of the project
documentation for review by the peak national technical review agencies
as part of their approval processes.

Harry Anagnostaras-Adams, theManaging Director of EMED Mining
said,"Progress continues on the key business plan tasks for the quarter and
the Company's finance plans head in the previously reported targeted
direction."The financing and offtake arrangements announced today reflect
our
long-stated commitment to build the highest-quality links for a small
portion of our production into China, the key driver of global demand
for our product, and to do so via an alliance with leading Chinese
metal processor XGC is especially pleasing."This complements our overall
product strategy wherein most of our
production is expected to be delivered for copper production use in
Spain and other European smelters, with whom we have also established
appropriate dialogue".

Enquiries

EMED Mining                Harry Anagnostaras-Adams +357 9945 7843

RFC Corporate Finance      Stuart Laing             +61 8 9480 2500

Fox-Davies Capital         Simon Leathers           +44 203 463 5022

Bishopsgate Communications Nick Rome/Shabnam Bashir +44 207 562 3350

Proconsul Capital          Andreas Curkovic         +1 416 577 9927





Further Information on the XGC Transaction



Subscription

The Company and XGC have entered into a subscription agreement
(the"Subscription Agreement") pursuant to which a subsidiary of XGC, Hong
Kong Xiangguang International Holdings Limited ("Xiang Guang HK"), has
conditionally agreed to subscribe for 105,378,519 new ordinary shares
of 0.25 pence each in the capital of the Company (the "Subscription
Shares") at a price per share of 9 pence each (or approximately
US$0.14). The proceeds of the Subscription will be used for general
working capital purposes, particularly in connection with the Company's
ongoing efforts in connection with the restart of copper production at
the Rio Tinto Mine.

The Subscription Agreement is subject to a number of conditions
including: the approval of the Company's shareholders to the issue of
the Subscription Shares; the approval of the Chinese National
Development and Reform Committee; Toronto Stock Exchange approval; and
admission of the Subscription Shares to trading on the AIM market.
Such conditions are required to be satisfied (or where possible,
waived) on or before 31 March 2012 (or such later date as the parties
may agree) (the "Long Stop Date"). The parties may terminate the
Subscription Agreement if the conditions are not satisfied by the Long
Stop Date and XGC may terminate prior to completion where there is a
material adverse effect concerning the Company or its subsidiaries.

Upon completion of the Subscription, Xiang Guang HK will hold
approximately 10% of the fully-diluted capital and approximately 11% of
the issued capital of the Company. Subject to completion of the
Subscription, the Company will grant XGC and Xiang Guang HK a right to
participate in future share issues by the Company (save in respect of
certain exempt issues set out in the Subscription Agreement ("Exempt
Issues") on a pro rata basis for such time as their combined interest
in the issued share capital of the Company exceeds 5%. The Company has
also granted XGC the right to appoint a director to the EMED board of
directors (the "Board") for such time as XGC and Xiang Guang HK
combined interest in the issued share capital of the Company equals 8%
or more of the Company's issued share capital (excluding shares issued
pursuant to Exempt Issues) and there remains an amount drawn down and
outstanding to XGC in respect of the Cost Overrun Support. Any
appointment to the Board must be approved by the Board and the
Company's nominated adviser.

XGC has undertaken not to dispose, and procure that Xiang Guang does
not dispose, of any interest in the Subscription Shares for a period of
6 months following completion of the Subscription, save in certain
limited circumstances.

As noted above, the Subscription is conditional, amongst other things,
on the Company's shareholders approving the issue of the Subscription
Shares. The Company will publish a circular in due course convening an
extraordinary general meeting to seek such approval and will make a
further announcement following such publication of the time and place
of the meeting.

Cost Overrun Support

EMED Mining and XGC have entered into a commitment letter containing
the indicative terms for a $15 million Cost Overrun Support facility.
Pursuant to the Commitment Letter, XGC has conditionally agreed to
arrange, underwrite, provide or procure the Cost Overrun Support as
required by the financial institutions which will provide the principal
debt facility (the "Senior Facility") to be used to fund the restart of
commercial production at the Rio Tinto Mine. The obligations of XGC
under the Commitment Letter are subject to certain conditions including
the entry into the definitive Cost Overrun Support facility documents
by no later than 31 December 2014 (as may be extended by agreement
between EMED Mining and XGC). The Commitment Letter will terminate if
the Subscription Agreement does not become unconditional by the Long
Stop Date.

EMED Mining may seek cost overrun support from third parties; however
if it does so XGC has the right (exercisable in 30 days) to match the
terms and conditions offered by a third party for cost overrun support.

Pursuant to the terms of the Commitment Letter, interest will accrue at
150 basis points per annum over the margin on the Senior Facility; EMED
Mining would pay a commitment fee of 1% per annum (or the same as under
the Senior Facility, if higher) and an arrangement fee of 2% (flat).
The Cost Overrun Support would be available concurrently with drawdown
under the Senior Facility and second ranking security is to be granted
over the asset and share package granted to the providers of the Senior
Facility.

Off-take Agreement

Pursuant to an off-take agreement entered into today, ("Off-take
Agreement") EMED Marketing is obliged to produce, sell and deliver to
XGC 30% of copper concentrates produced from the Rio Tinto Mine each
year, until the delivery of a cumulative quantity equivalent to 25% of
the Rio Tinto Mine's production for the first 10 years of commercial
mine production based on its current reported copper reserves as set
forth in the Behre Dolbear NI 43-101 Independent Technical Report dated
17 November 2010.

EMED Marketing may terminate the Off-take Agreement in certain
circumstances including, (i) a breach by XGC of its obligations
pursuant to the Off-take Agreement or (ii) the Subscription Agreement
failing to become unconditional by the Long Stop Date; or (iii) XGC
failing to enter into (prior to 31 December 2014) or fulfilling any of
its obligations under the definitive documentation for the Cost Overrun
Support for any reason (other than the failure of the Company to
negotiate terms not provided for in the Commitment Letter in good
faith, or the Company acting unreasonably in any such negotiations).

Information on XGC

XGC is one of the world's largest Copper smelting, refining and
processing group located in Shandong province of China, with a designed
smelting capacity of 450,000mt/y Cu from concentrate and refining
capacity of 600,000mt/y Copper cathodes. It employs the state-of-art
copper smelting technology of double flash smelting and converting.
XGC's parent company, GMK Holding Co., Ltd ("GMK"), is a leading
privately owned enterprise group in China including significant food
production interests.

EMED Mining and XGC were advised by LN Metals International Limited and
Canaccord Genuity London respectively in relation to the above
mentioned proposals.



Cautionary Notes



This announcement contains "forward looking information" which may
include, but is not limited to, statements with respect to the
completion of the Subscription, the use of proceeds, shareholder
approval in respect of the issuance of the Subscription Shares, TSX
approval of the transactions, Chinese governmental approval of the
transactions, admission of the Subscription Shares to trading on AIM,
the execution of definitive documentation in respect of the Cost
Overrun Support facility and the ability of the Company to fulfill its
obligations under the Offtake Agreement. "Forward looking information"
may also include statements with respect to the future financial or
operating performance of the Company, its subsidiaries and its
projects, the future price of metals, the estimation of ore reserves
and resources, the conversion of estimated resources into reserves, the
realization of ore reserve estimates, the timing and amount of
estimated future production, costs of production, capital, operating
and exploration expenditures, costs and timing of the development of
new deposits, costs and timing of future exploration, requirements for
additional capital, government regulation of mining operations,
environmental risks, reclamation expenses, title disputes or claims,
limitations of insurance coverage and the timing and possible outcome
of pending litigation and regulatory matters. Often, but not always,
forward looking statements can be identified by the use of words such
as "plans", "expects", "is expected", "budget", "scheduled","estimates",
"forecasts", "intends", "anticipates" or "does not
anticipate", or "believes" or variations (including negative
variations) of such words and phrases, or state that certain actions,
events or results "may", "could", "would", "might" or "will" be taken,
occur or be achieved. Accordingly, readers should not place undue
reliance on forward looking statements.



Forward looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company and/or its subsidiaries to
be materially different from any future results, performance or
achievements expressed or implied by the forward looking statements.
Such factors include, among others, general business, economic,
competitive, political and social uncertainties; the actual results of
current exploration activities; actual results of reclamation
activities; conclusions of economic evaluations; changes in project
parameters as plans continue to be refined; future prices of metals;
the future costs of capital to the Company; possible variations of ore
grade or recovery rates; failure of plant, equipment or processes to
operate as anticipated; accidents, labour disputes and other risks of
the mining industry; political instability, terrorist attacks,
insurrection or war; delays in obtaining governmental approvals or
financing or in the completion of development or construction
activities, as well as those factors discussed in the section entitled"Risk
Factors" in the Company's annual information form.



Although the Company has attempted to identify important factors that
could cause actual actions, events or results to differ materially from
those described in forward looking statements, there may be other
factors that cause actions, events or results to differ from those
anticipated, estimated or intended. Forward looking statements
contained herein are made as of the date of this announcement and the
Company disclaims any obligation to update any forward looking
statements, whether as a result of new information, future events or
results or otherwise. There can be no assurance that forward looking
statements will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue reliance on
forward looking statements.





                    This information is provided by RNS
          The company news service from the London Stock Exchange

END

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