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

Sherwood Copper Corporation

May 02, 2007 16:30 ET

Sherwood Copper Corporation: Yukon Utilities Board Turns Down Provisions of the Power Purchase Agreement

Decision has no impact on Development or Operation of Minto Mine

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - May 2, 2007) - Sherwood Copper Corporation (TSX VENTURE:SWC)(TSX VENTURE:SWC.DB) today announced that, in an unexpected move, the Yukon Utility Board ("YUB") has denied approval of certain provisions of the Power Purchase Agreement ("PPA") between Yukon Energy Corporation ("YEC") and Sherwood's wholly owned subsidiary, Minto Explorations Ltd. ("MintoEx"), which means the PPA will not be implemented at this time. This decision has no impact on the development or operation of the high grade Minto copper-gold mine, which has already installed on-site diesel generation capacity sufficient for all operations, including production. The feasibility study supporting the development of the Minto Mine, announced August 28, 2006, assumed the use of diesel power for the entire mine life, so no adjustment to the forecast costs set out in the feasibility study is triggered by this decision. Sherwood is reviewing the decisions of the YUB to determine whether or not a suitable arrangement can be worked out for the provision of grid power.

"Naturally, Sherwood is disappointed with this decision by YUB, which would leave Sherwood Copper's subsidiary, Minto Explorations, with an unworkable Power Purchase Agreement and disadvantages not only Sherwood Copper and Minto Explorations, but YEC, its ratepayers, the Yukon & Federal governments and the Selkirk First Nation," said Stephen P. Quin, President of Sherwood Copper. "We offered secured guarantees totalling $33 million to facilitate the sale of surplus hydroelectricity by YEC to the Minto Mine; in exchange we required some form of certainty as to costs. YUB rejected this approach, leaving MintoEx with no certainty of any return on its capital investment and still obligated to provide YEC with secured guarantees. This does not represent a reasonable transaction and MintoEx will not be proceeding with a PPA on this basis. As a result, significant benefits that would have accrued to YEC, its ratepayers, governments and Selkirk First Nation will not be available. MintoEx will review the YUB's decision in more detail and consider whether it will continue to pursue a grid power option."

Implementation of the PPA as originally structured would have meant reduced energy costs to MintoEx, increased revenues to YEC from currently unsaleable energy, infrastructure development for all Yukoners and, because of taxation structures in the Yukon, increased taxes and royalties to all levels of government, including Selkirk First Nation. While connection to grid power would have resulted in some cost savings to MintoEx, improving the project margin by 3%, such a gain does not does not warrant taking on unacceptable risks for such a marginal return.

Sherwood and MintoEx are reviewing YUB's decision in detail and will work with YEC and other stakeholders to determine whether a suitable arrangement can be made that would be acceptable. Nevertheless, MintoEx will not be proceeding with a PPA on the basis previously agreed to by YEC and MintoEx, nor on the basis implied in the YUB decision, which rejected key provisions of the agreement between YEC & MintoEx.

Minto Mine

The Minto Project is a high grade copper-gold deposit located 240km north of Whitehorse, and is owned 100% by Minto Explorations Ltd., a wholly owned subsidiary of Sherwood Copper Corporation. The Minto deposit is being developed as an open pit mining operation followed by conventional crushing, grinding, and flotation to produce copper concentrates with significant gold and silver credits. Production is projected to commence in June 2007.

Sherwood

Sherwood's successful consolidation of the ownership of the Minto Project provides a unique investment opportunity: participation in a fully permitted, Canadian, high-grade, open pit copper-gold mine offering near term, low cost copper-gold production, as well as exposure to the tremendous exploration potential of the Minto property.

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

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
    Investor Relations
    (604) 687-7545 or 1-888-338-2200
    (604) 689-5041 (FAX)
    Website: www.sherwoodcopper.com