Redcorp Ventures Ltd.

Redcorp Ventures Ltd.

October 15, 2008 19:26 ET

Redcorp Finalizes Documentation With Noteholders Required to Access $200 Million in Project Finance Facilities

Noteholder Meeting Cancelled

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 15, 2008) -


Redcorp Ventures Ltd. (TSX:RDV) ("Redcorp" or the "Company") and its wholly-owned subsidiary, Redfern Resources Ltd. ("Redfern"), are pleased to announce that the Extraordinary Resolution amending certain provisions of the Note Indenture dated July 10, 2007 between the Company and CIBC Mellon Trust Company ("CIBC Mellon Trust"), as described in the Company's release of September 18, 2008, has been approved by written resolution of holders as of the record date of September 15, 2008, of more than 66 2/3% of the principal amount of outstanding 13% senior secured notes of the Company (the "Notes"). Accordingly, the meeting of Noteholders scheduled for October 16, 2008 has been cancelled. A copy of the amended and restated Note Indenture dated October 15, 2008, entered into between the Company and CIBC Mellon Trust (the "Amended and Restated Note Indenture") giving effect to the amendments will be filed on SEDAR shortly.

The amendments were required to provide Redcorp with access to over CAN$200 million of project financing necessary to complete the construction of the Tulsequah Project.

Mr. Terence Chandler, the President and Chief Executive Officer of the Company, noted: "This is an important milestone for Redcorp. Redcorp evaluated several funding alternatives and determined that amending the Note Indenture to accommodate the new funding arrangements was the most prudent response to its funding shortfall. Redcorp is pleased that it was able to secure project financing and the amendments to the Note Indenture in these challenging credit markets. The additional funds will allow construction to continue with the goal of reaching commercial production by the fourth quarter of 2009."

Project Financing Arrangements and the Amended and Restated Note Indenture

The amendments reflected in the Amended and Restated Note Indenture will permit Redcorp to:

- access a credit facility with HSBC Bank Canada providing funding of up to CAN$85 million secured by Redcorp's investments in asset-backed commercial paper notes (as announced on August 22, 2008);

- satisfy one of the funding conditions under the gold purchase agreement with Gold Wheaton Gold Corp. providing funding of up to US$90 million (as announced on June 12, 2008 and September 19, 2008); and

- enter into a contingent overrun subordinated debt facility of CAN$25 million arranged through MRI Trading AG as part of the Company's concentrate offtake agreements (as announced on February 4, 2008).

The amendments as reflected in the Amended and Restated Note Indenture include, among other things, an additional 2.5% interest payment on the Notes, compounded semi-annually and payable on maturity.

In consideration for the holders of the Notes consenting to the amendments, the Company has agreed to: (i) issue common share purchase warrants (the "Consent Warrants"); and (ii) grant a net smelter return royalty (the "NSR Royalty") on production from the Tulsequah Project; each as more particularly described below.

Additional Interest Payment

Each Note outstanding shall bear additional interest (the "Additional Interest") at the annual rate of 2.5%, compounded semi-annually and payable on maturity. The Additional Interest shall be calculated semi-annually and shall accrue on (i) the principal amount of Notes outstanding at such time; and (ii) the aggregate Additional Interest accrued and unpaid to such date (the "Additional Interest Amount"). In addition, cash interest of 13% per annum shall be paid semi-annually in arrears on June 30 and December 31 on the Additional Interest Amount.

Consent Warrants

Subject to adjustment noted below and the availability of prospectus and registration exemptions in the non-Qualifying Jurisdictions (as hereinafter defined), Redcorp will issue 701 Consent Warrants per CAN$1,000 principal amount of Notes outstanding to Noteholders of record as of the close of business on the Record Date (as hereinafter defined). Each Consent Warrant will entitle the holder to purchase for a period of three years from the Record Date one common share of the Company at an exercise price of CAN$0.0988 per share, representing a 20% premium to the five day volume weighted average trading price of Redcorp's common shares on the Toronto Stock Exchange immediately prior to September 18, 2008, being the date the Noteholders provided their consent in principal to the amendments. The Consent Warrants will be created and issued under a warrant indenture entered into between the Company and CIBC Mellon Trust.

NSR Royalty

Each Noteholder will have a right to receive a pro rata interest in the NSR Royalty, to be evidenced by certificates (the "NSR Certificates"). Subject to the availability of prospectus and registration exemptions in the non-Qualifying Jurisdictions (as hereinafter defined) the Company will issue one NSR Certificate for each CAN$1,000 principal amount of Notes outstanding to Noteholders of record as of the close of business on the Record Date (as hereinafter defined). Each NSR Certificate will entitle the holder to receive a pro rata interest in a 2.5% NSR Royalty on production from the Tulsequah Project. A holder's pro rata interest in the NSR Royalty at any time shall be equal to the percentage obtained by dividing the total number of NSR Certificates held by such holder at such time by 141,975. The NSR Royalty will be calculated on the basis of gross revenue received by the Company or Redfern less certain permissible deductions incurred subsequent to concentrating, including (among other things) smelting, refining, marketing, transportation and insurance in the given period. The NSR Royalty payment will also be net of any taxes required to be withheld by Redcorp as a result of the payments. The NSR Certificates will be created and issued under an NSR indenture entered into between the Company, Redfern and CIBC Mellon Trust.

Issuance of Consent Warrants and NSR Certificates

The Consent Warrants and NSR Certificates will be distributed to holders of Notes resident in the provinces of British Columbia, Alberta, Manitoba and Ontario (collectively, the "Qualifying Jurisdictions") pursuant to a short form prospectus (the "Prospectus"). The Consent Warrants and NSR Certificates will be issued to beneficial Noteholders of record (the "Record Date") as of the close of business on the seventh trading day following the date (the "Qualification Date") that a receipt is issued by the British Columbia Securities Commission for the Prospectus. In the event that the Qualification Date does not occur on or before November 29, 2008, the number of Consent Warrants to be issued to each Noteholder will be increased, subject to approval by the shareholders of Redcorp, by 10% and the NSR will be increased to 2.75%. Redcorp has agreed to a one time cash payment of CAN$531,269 pro-rata to the Noteholders in lieu of the penalty Consent Warrants at the time of commercial production if shareholder approval is not obtained.

The Consent Warrants and NSR Certificates to be issued to residents of jurisdictions other than the Qualifying Jurisdictions (the "non-Qualifying Jurisdictions") will be issued pursuant and subject to the availability of prospectus and registration exemptions in such non-Qualifying Jurisdictions. Noteholders in non-Qualifying Jurisdictions will be asked to make certain representations to the Company confirming their eligibility to receive such securities under applicable exemptions. Consent Warrants and NSR Certificates issued to residents in the non-Qualifying Jurisdictions will be subject to applicable hold periods imposed under securities legislation.

The issuance of the Consent Warrants and NSR Certificates remains subject to regulatory approval.

Paradigm Capital Inc. is acting as financial advisor to Redcorp with respect to the transaction.

Use of Funding

Redcorp has advanced funds to Redfern to construct the Tulsequah Project in northwest British Columbia. Construction commenced in late 2007 and is advanced at this time. Work completed to date includes the surface transportation infrastructure (roads and airstrip), temporary construction camp facilities, barge landing and initial preparation of the mine site. The additional funds will be utilized to complete the remaining portion of construction activities including surface plant, underground development and tailings management facilities.

Redcorp is a Vancouver based mineral exploration and development company with active projects in British Columbia, Canada and Portugal. Further information on Redcorp and the Tulsequah Project can be obtained on our website at and at Redfern's website at or by calling toll-free to Troy Winsor, Manager of Investor Relations or Salina Landstad, Manager of Public Relations at the contact numbers listed below.


Terence Chandler, President and CEO

The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from the U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States.

Certain of the statements made and information contained herein is "forward-looking information" within the meaning of the Securities Act (Ontario) and the Securities Act (Alberta.) Forward-looking information includes disclosure regarding possible or anticipated events, conditions or results of operations that is based on assumptions about future economic conditions and courses of action and includes future oriented financial information with respect to prospective results of operations or financial position that is presented either as a forecast or a projection. Forward-looking information is often, but not always, identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "expect" and "intend"; statements that an event or result is "due" on or "may", "will", "should", "could", or "might" occur or be achieved; and, other similar expressions.

More specifically, forward-looking information contained herein includes, without limitation, statements concerning our plans at our Tulsequah Project (inclusive of the Big Bull Project), the net present value of the Tulsequah Project, the timing and amount of estimated future production and mine life, expected future prices of gold, silver, copper, lead and zinc, mineral reserve and mineral resource estimates, estimated capital and operating costs of the project, estimated capital pay-back period, estimated asset retirement obligations, timing of development and permitting time lines; all of which involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information.

Forward-looking information contained herein is based on material factors and assumptions and is subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from a conclusion, forecast or projection in the forward-looking information. These include, without limitation, material factors and assumptions relating to, and risks and uncertainties associated with, the availability of financing for activities when required and on acceptable terms, the accuracy of the interpretation of drill results and the estimation of mineral resources and reserves, the geology, grade and continuity of mineral deposits, the consistency of future exploration, development or mining results with our expectations, metal price fluctuations, the achievement and maintenance of planned production rates, the accuracy of component costs of capital and operating cost estimates, current and future environmental and regulatory requirements, favourable governmental relations, the availability of permits and the timeliness of the permitting process, the availability of shipping services, the ultimate recovery amount, if any, of our investment in third-party asset-backed commercial paper (ABCP) that is currently undergoing liquidity restructuring by the Committee representing the Montreal Accord, the availability of specialized vehicles and similar equipment, costs of remediation and mitigation, maintenance of title to our mineral properties, industrial accidents, equipment breakdowns, contractor's costs, remote site transportation costs, materials costs for remediation, labour disputes, the potential for delays in exploration or development activities, timely completion of future NI 43-101 compliant reports, timely completion of future feasibility studies, the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses, commodity price fluctuations, currency fluctuations, continuing global demand for base metals, expectations and beliefs of management and other risks and uncertainties, including those described under Risk Factors Relating to Our Business in our Annual Information Form, filed on SEDAR on March 31, 2008, and in each subsequent Management's Discussion and Analysis.
Although we have 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 not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from any conclusions, forecasts or projections described in the forward-looking information. Accordingly, readers are advised not to place undue reliance on forward-looking information. Except as required under applicable securities legislation, we undertake no obligation to publicly update or revise forward-looking information, whether as a result of new information, future events or otherwise.

News Release 08-20

Contact Information

  • Redcorp Ventures Ltd.
    Troy Winsor
    Manager, Investor Relations
    (604) 466-8934 or Toll Free: 1-888-225-9662
    Redcorp Ventures Ltd.
    Salina Landstad
    Manager, Public Relations & Corporate Communications
    (604) 639-0135 or Toll Free: 1-888-669-4775 ext. 103
    (604) 669-5330 (FAX)
    Website: /