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

Sherwood Copper Corporation

March 10, 2008 17:06 ET

Sherwood Completes Funding Arrangements for Kutcho Project & Begins Work Program

Closes C$10 Million Corporate Credit Facility and C$7.2 Million Flow Through Financing

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 10, 2008) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES.

Sherwood Copper Corporation (TSX VENTURE:SWC)(TSX VENTURE:SWC.DB) today announced that it has completed funding arrangements for the advancement of the high-grade Kutcho copper-zinc-silver-gold project in Northern British Columbia toward a production decision. As a result, Sherwood has commenced work on a preliminary assessment aimed at a re-scoped and redesigned project that is focused on a smaller, less capital intensive high grade open pit project that could be developed faster than previously planned by Western Keltic Mines Inc. ("Western Keltic"), something more akin to the Minto Mine development approach than what had been previously proposed.

Sherwood has closed on its C$10 million revolving corporate credit facility (the "CCF") with Macquarie Bank Limited ("Macquarie") that was previously announced in a news release dated February 29, 2008. In addition, further to its news release dated February 15, 2008, Sherwood has completed an over-subscribed non-brokered private placement of 1,205,000 flow-through shares at a price of C$6.00 for gross proceeds of C$7.23 million in two tranches comprised of 965,000 flow-through shares and 240,000 flow-through shares respectively. The flow-through shares are subject to a four-month hold period that expires on July 8, 2008 as to 965,000 shares and July 11, 2008 as to 240,000 shares. The funds from the CCF and flow through private placement are primarily to be used to advance the Kutcho Project towards a production decision and for closing costs related to the acquisition of Western Keltic, such as Western Keltic's accounts payable, severance and transaction costs. In order to permit funds to flow from Sherwood to its 93% owned subsidiary, Western Keltic, Sherwood has entered into funding arrangements with Western Keltic that have been approved by Western Keltic's board of directors, which board is independent of Sherwood.

Stephen Quin and Bruce McLeod, both of whom are directors of Sherwood, acquired 10,000 and 7,000 flow-through shares respectively as subscribers under the private placement. The participation by an insider in the private placement is considered to be a "related party transaction" as defined under Multilateral Instrument 61-101 ("MI 61-101"). The transaction is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 as neither the fair market value of the securities being issued nor the consideration paid exceeds 25% of Sherwood's market capitalization.

The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.

"Now that Sherwood has acquired control of the high grade Kutcho copper-zinc-gold-silver deposit in north-western British Columbia through its 93.0% ownership of Western Keltic, Sherwood has commenced a preliminary assessment for a more robust near term mine development option," said Stephen Quin, President & CEO of Sherwood. "These financing arrangements provide Sherwood with the necessary funding to further its near term goal of in-fill drilling, re-scoping and re-engineering the Kutcho project until cash flow from the higher grade Minto copper-gold mine is available to fund ongoing Kutcho project activities. Sherwood's objective is the rapid development of a smaller scale, lower capital cost operation at Kutcho that is focused on higher grade base metal production," he added.

Corporate Credit Facility

Sherwood has closed the C$10 million revolving CCF with Macquarie detailed in the news release dated February 29, 2008. The CCF has a term of one year and may be extended at Sherwood's request for an additional year, subject to Macquarie's approval. Funds may be borrowed, repaid and re-borrowed under the CCF, with the final repayment due on the final maturity date. The CCF will bear an interest rate equal to the Canadian dollar London Interbank Offered Rate ("LIBOR") plus a margin of 225 basis points (2.25%) per annum on drawn funds. There is a 60 basis point (0.6%) commitment fee on undrawn funds.

As part of the establishment fee for the CCF, Sherwood will issue Macquarie two-year warrants to purchase 755,405 common shares of Sherwood at a price of $5.25 per share, with warrants vested proportionately to the amount drawn.

Intercompany Loan Agreement

Given that Sherwood owns less than 100% of Western Keltic, Sherwood and Western Keltic have signed a Demand Promissory Note (the "Note") providing a mechanism whereby Sherwood can advance funds to Western Keltic for its closing costs related to the transaction, severance, outstanding accounts payable, funding the advancement of the Kutcho Project and for general corporate purposes.

Advances to Western Keltic are secured by a demand debenture issued to Sherwood by Western Keltic. Under the terms of the Note, outstanding advances will attract an interest rate of LIBOR plus 3%. Advances can be repaid by Western Keltic at any time, without penalty.

The Note and demand debenture were reviewed and approved by Western Keltic's board of directors.

Flow-through Agency Agreement

A portion of the gross proceeds from the flow-through financing will be transferred to its wholly owned subsidiary, Minto Explorations Ltd. ("Minto Explorations"), by way of a back-to-back flow-through issue to Sherwood by Minto Explorations. The remainder of the gross proceeds from the private placement will be advanced to Western Keltic pursuant to an agency agreement entered into between Sherwood and Western Keltic whereby such funds will be used by Western Keltic to incur Canadian exploration expenditures as agent for Sherwood.

Western Keltic Board and Officer Changes

Following Sherwood's acquisition of 93% of Western Keltic, the board of directors of Western Keltic has been reconstituted to comprise Stephen P. Quin, President & CEO of Sherwood Copper, D. Bruce McLeod, Executive Chairman of Sherwood Copper and John Hick, an independent director continuing from the prior board. The new board has either terminated the employment or accepted the resignation of all Western Keltic's officers and has appointed Stephen P. Quin as President, Richard Godfrey as Chief Financial Officer and Brenda Nowak as Corporate Secretary.

"I would like to thank all of the departing directors and officers of Western Keltic for their contributions to Western Keltic over the past number of years," said Mr. Quin. "And I further want to thank John Hick for agreeing to stay on and ensure the interests of the minority shareholders are represented during the transition process to 100% ownership by Sherwood."

Correction as to Number of Western Keltic Shares Taken Up

As announced March 6, 2008, Sherwood plans to commence a second step transaction by way of statutory arrangement, amalgamation, merger, reorganization, consolidation, recapitalization or other transaction to acquire all of the remaining Western Keltic common shares ("Western Keltic Shares") not already owned by Sherwood. Sherwood also disclosed in the March 6, 2008 press release that it had acquired a total of 76,777,214 Western Keltic Shares. Contrary to what was reported in that news release, Sherwood has in fact only taken up 76,445,714 Western Keltic Shares, being 331,500 shares less than previously reported due the failure of one party to deliver Western Keltic Shares tendered under a notice of guaranteed delivery provided to the depositary. This revised number still represents approximately 93% of the outstanding Western Keltic Shares.

About Sherwood Copper

Sherwood Copper's current focus is profitable production of base and precious metals from high grade, open pit mines in Canada. Sherwood's first operating mine, the high grade Minto copper-gold mine in Yukon, Canada, was built on budget and ahead of schedule. The Minto Mine is one of the highest-grade open pit copper-gold mines in the world, and is forecast to be a low cost producer. Aggressive exploration on the Minto property has yielded significant success, providing Sherwood the opportunity to 'grow from within' by expanding the resource and reserve base, potentially leading to further production increases. To further accelerate it production growth, Sherwood intends to pursue merger & acquisition opportunities that fit its business model and, in March 2008, Sherwood acquired more than 93% ownership in Western Keltic Mines, owner of the high-grade Kutcho copper-zinc-gold-silver deposit in northwestern British Columbia. Sherwood aims to repeat its successful development of the Minto Mine at the Kutcho project.

Additional Information

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

On behalf of the board of directors

SHERWOOD COPPER CORPORATION

Stephen P. Quin, President & CEO

Forward-Looking Statements

This document may contain "forward-looking statements" within the meaning of Canadian securities legislation and the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements are made as of the date of this document and the Company does not intend, and does not assume any obligation, to update these forward-looking statements.

Forward-looking statements relate to future events or future performance and reflect management's expectations or beliefs regarding future events and include, but are not limited to, statements with respect to the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, success of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" or the negative of these terms or comparable terminology. By their very nature forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, risks related to actual results of current exploration activities; changes in project parameters as plans continue to be refined; future prices of resources; possible variations in ore reserves, grade or recovery rates; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; as well as those factors detailed from time to time in the Company's interim and annual financial statements and management's discussion and analysis of those statements, all of which are filed and available for review on SEDAR at www.sedar.com. 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 not to be as anticipated, estimated or intended. 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.

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 P. Quin
    (604) 687-7545
    or
    Sherwood Copper Corporation
    Brad Kopp
    (604) 687-7545
    (604) 689-5041 (FAX)
    Website: www.sherwoodcopper.com