Sherwood Copper Corporation
TSX VENTURE : SWC
TSX VENTURE : SWC.DB

Sherwood Copper Corporation

November 26, 2007 07:00 ET

Sherwood Announces Agreement for Acquisition of Western Keltic Mines

- Inclusion of Kutcho Creek Deposit Would Double Copper Resources & Could Double Production -

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 26, 2007) - Sherwood Copper Corporation (TSX VENTURE:SWC) today announced that it has entered into an agreement with Western Keltic Mines Inc. under which Sherwood has agreed to make an offer to acquire all the shares of Western Keltic through the issuance of 0.08 of a share of Sherwood for each share of Western Keltic. Based on the November 23, 2007 closing price for the Sherwood shares, this equates to an approximate price of $0.47 per Western Keltic share. The consideration under the offer represents a premium of 53% over Western Keltic's closing price on November 23, 2007. Based on 79,830,855 Western Keltic shares outstanding, this offer equates to approximately $37 million for all of the issued and outstanding shares of Western Keltic. Western Keltic's board, along with its largest registered shareholder (representing an aggregate of 26.8 million shares of Western Keltic that are issued or issuable upon the exercise of options and warrants) have entered into or have agreed to enter into lock-up and support agreements in respect of the transaction. Western Keltic's board has unanimously approved the terms of the agreement and recommend the shareholders of Western Keltic tender into Sherwood's offer when mailed.

"The acquisition of Western Keltic and its Kutcho Creek copper-zinc deposit would more than double our copper resources, and offers the potential to continue Sherwood's transformation to a significant base metal producer through the potential development of Kutcho Creek," said Stephen P. Quin, Sherwood's President & CEO. "We see the opportunity to redeploy our successful mine evaluation and development team to maximize the value of the Kutcho Creek property to the combined companies' shareholders. We aim to reassess the development plans for Kutcho Creek over the coming months to determine the most attractive development option, much as we did at Minto, with the objective of developing a robust, low cost mining operation," he said. "Further, the high grade Minto mine should generate significant free cash flow at current metal prices that could be re-invested in the development of a second mine at Kutcho Creek, significantly reducing overall financing needs and share dilution versus Western Keltic going it alone."

Sherwood Copper recently completed the development of Phase 1 of its high grade Minto copper-gold mine in the Yukon, ahead of schedule and on budget, and aims to complete its Phase 2 mill expansion by the end of 2007. In addition, Sherwood will shortly be announcing the results of an independent pre-feasibility study on the Minto mine that will incorporate the discovery of the Area 2 deposit in 2006 and lay out the basis for a Phase 3 mill expansion. Further, exploration successes during 2007, including four new discoveries of high grade copper-gold mineralization, indicate potential for yet more growth within the Minto property. Results from 46 of 92 exploration holes completed in 2007 are still awaiting assays.

Western Keltic recently completed a pre-feasibility study evaluating the potential development of the Kutcho Creek deposit, the results of which were announced on September 5, 2007. This study defined resources and reserves as set out in an amended and restated technical report filed on SEDAR on October 29, 2007. Since that time, Western Keltic has been advancing the project towards completion of a feasibility study by conducting geotechnical and environmental baseline studies, as well as advancing the permitting process for approval of production. Western Keltic has also been actively engaged in discussions with the Talhtan and Kaska First Nations, as well as other local communities to ensure there is broad based support for the development of a mine at Kutcho Creek, while taking into account the concerns of the First Nations and other stakeholders.

"Based on public information and our due diligence, Sherwood believes that the Kutcho Creek deposit shares many similarities with the Minto mine; being a smaller tonnage, relatively high grade open pittable copper deposit with by-product credits," said Mr. Quin. "These similarities suggest that our experiences, approach and skills built up over the past two years at the Minto Mine should be directly transferable to the design, construction, financing and operation of a mine at Kutcho Creek. We believe there is an opportunity to "do it again" at Kutcho Creek, while learning from the challenges and successes experienced in the development of the Minto Mine."

Transaction Rationale

Sherwood believes this offer provides significant benefits for Western Keltic's existing shareholders including, but not limited to, the following:

- Western Keltic shareholders will gain immediate exposure to Sherwood's current copper production, production growth from planned mill expansions and the tremendous exploration results being generated by Sherwood's exploration team on the Minto property;

- Sherwood should have access to financing and cash flow from its Minto Mine operations that could contribute funds towards the development cost of the Kutcho Creek deposit;

- Sherwood has a proven track record of mine development in the same region as Western Keltic's Kutcho Creek deposit;

- Sherwood has access to the same mine development team that successfully brought its mine into production, ahead of schedule and on budget; and

- Sherwood has successfully worked with the Yukon Government and Selkirk First Nation to advance its project through feasibility, permitting, development and into production and believes it can bring these experiences to bear on the Kutcho Creek deposit.

Sherwood further believes that the Western Keltic shareholders would benefit from the tax-effective combination of the two companies and that they could participate in the upside from the significantly enhanced business platform, in addition to having greater financial flexibility as a result of the underlying liquidity in Sherwood's shares.

Sherwood Offer

Sherwood anticipates that the transaction would be structured by way of a take-over offer and would be subject to certain standard conditions including that no less than 66 2/3% of the issued and outstanding shares of Western Keltic be tendered to the offer. However, the parties may consider an alternative form of transaction such as a plan of arrangement or other form of business combination as mutually determined by Sherwood and Western Keltic.

Full details of the offer will be included in the formal offer and take-over circular to be filed with the regulatory authorities and mailed to Western Keltic shareholders in accordance with applicable securities laws. The offer to shareholders of Western Keltic will be to acquire all of the issued and outstanding shares of Western Keltic in consideration for the issue of Sherwood shares on the basis of 0.08 Sherwood shares for every Western Keltic share. This offer represents an approximate 53% premium to the closing stock price for the Western Keltic shares on November 23, 2007. Based on the current Western Keltic shares outstanding, the transaction would involve the issuance of approximately 6.4 million Sherwood shares, which would equate to 12.5% of Sherwood's pro forma shares outstanding.

If the offer is to be made by takeover offer, the offer will remain open for 35 days following the mailing date and will be subject to certain conditions relating to receipt of requisite regulatory approvals, the absence of any material changes and acceptance of the offer by Western Keltic shareholders owning not less than two-thirds of the Western Keltic common shares. The letter agreement also provides for usual deal protection provisions including a break fee of $1.4 million in favour of Sherwood in the event of a superior proposal.

Sherwood has engaged Dundee Securities Corporation as its financial advisor and DuMoulin Black LLP as its legal advisor in respect of this transaction.

Sherwood

Sherwood's successful consolidation of the ownership of the Minto Project provides a unique investment opportunity - participation in a fully permitted, operating, high-grade, open pit copper-gold mine located in Canada with tremendous exploration potential on the 100% owned property. When combined with the potential development of Western Keltic's Kutcho Creek deposit, Sherwood offers significant near-term and long-term growth potential.

Additional Information

Additional information on Sherwood and its Minto Mine can be obtained on Sherwood's website at http://www.sherwoodcopper.com.

Additional information on Western Keltic and its Kutcho Creek deposit is available on Western Keltic's website at http://www.westernkeltic.com.

On behalf of the board of directors

SHERWOOD COPPER CORPORATION

Stephen P. Quin, President & CEO

This news release may contain forward looking statements which are not historical facts, such as ore reserve estimates, anticipated production or results, sales, revenues, costs, or discussions of goals and exploration results, and involves a number of risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to, metal price volatility, volatility of metals production, project development, ore reserve estimates, future anticipated reserves and cost engineering estimate risks, geological factors and exploration results. See the Company's filings for a more detailed discussion of factors that may impact expected results.

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

Contact Information

  • Sherwood Copper Corporation
    Stephen Quin
    President
    (604) 687-7545 or 1-888-338-2200
    or
    Sherwood Copper Corporation
    Brad Kopp
    (604) 687-7545 or 1-888-338-2200
    or
    Sherwood Copper Corporation
    Kristy Reynolds
    (604) 687-7545 or 1-888-338-2200
    (604) 689-5041 (FAX)
    Website: www.sherwoodcopper.com