Sherwood Copper Corporation
TSX VENTURE : SWC

Sherwood Copper Corporation

February 02, 2006 09:24 ET

Sherwood Receives Conditional Approval to Accelerate Warrant Exercise: Proceeds to be used to Fund Development of Minto Project, Potentially Faster than Forecast

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Feb. 2, 2006) - Sherwood Copper Corporation (TSX VENTURE:SWC) is pleased to announce that it has received conditional approval from the TSX Venture Exchange (the "Exchange") for approval of an incentive program to encourage the early exercise of 8.9 million warrants ("June 2007 Warrant(s)"). Final approval requires consent of two-thirds of the holders of the June 2007 Warrants.

As announced January 26, 2006, in order to encourage the early exercise of the warrants, Sherwood will be seeking an amendment to the terms of the June 2007 Warrants to enable the holder to receive a unit consisting of a common share and an additional half warrant (each whole a "New Warrant") for each June 2007 Warrant exercised prior to the expiry date of the incentive program. Provided the required warrant holder approvals have been received, Sherwood expects to give notice to the June 2007 Warrant holders in early February providing for exercise of a 10-day period thereafter. The June 2007 Warrants were issued as part of a financing completed in June 2005 and can be exercised at $1.40 until June 7, 2007.

The proceeds from the warrant exercise would be used to fund capital requirements related to the development of a mine at the Minto project, including certain major activities that may be undertaken ahead of the delivery of the final feasibility study, including pre-stripping and placing deposits on long lead time items needed for operations. The incentive program is subject to approval by two thirds of the June 2007 Warrant holders.

"Sherwood will now proceed to obtain warrant holder approval for the early exercise of the warrants," said Stephen Quin, President & CEO of Sherwood Copper. "Early exercise of the warrants would generate sufficient funds to allow Sherwood to make commitments in respect of the development of the high grade Minto copper-gold project that could result in a mine opening several months early than originally forecast, while reducing the overall dilution to shareholders versus a new financing," he said.

Early Warrant Exercise

After approval of the incentive program by two-thirds of the warrant holders and the resulting amendment to the June 2007 Warrants, each holder of a June 2007 Warrant who elects to exercise such amended June 2007 Warrant prior to the expiry date of the incentive program would receive a unit at a price of $1.40 per unit (the "Units"). Each Unit will consist of one common share and one-half New Warrant. Each whole New Warrant will allow the holder to acquire one common share at a price of $2.00 per share for two years following the date of issue of the Unit. If a warrant holder does not exercise the amended June 2007 Warrants by the end of the 10-day period, the amended June 2007 Warrants will continue to be exercisable for common shares on the same terms that previously existed.

The total number of warrants eligible to accept this offer is 8,983,000, which can be exercised at $1.40 per share for gross proceeds of $12,576,200 before costs and commissions. Sherwood has agreed to pay a syndicate of underwriters led by Dundee Securities Corporation and Westwind Partners Inc., as co-lead agents, and First Associates Investments Inc. and Canaccord Capital Corporation, as participating agents a 4% commission to assist in getting the warrants exercised.

Accelerated Development Option

Sherwood is evaluating options to commence a major pre-stripping program by mobilizing a mining contractor to the Minto site in March 2006, thus getting several months head start on the waste stripping. Waste stripping is anticipated to be the longest lead time item in the planned project development schedule for a mine at Minto. In addition, Sherwood is considering putting deposits down on long lead time items to ensure the processing facilities are available when stripping is complete, perhaps gaining three to four months on the previously contemplated production start date of mid-2007. The feasibility of an accelerated development program at Minto is being evaluated by Sherwood personnel in conjunction with its consultants and potential contractors and will be decided in the coming weeks. Regardless of the decision on timing of development, the proceeds of the warrant exercise will primarily be used to fund the development of a high grade copper-gold mine at Minto.

Minto Project

The Minto Project is a high-grade copper-gold deposit located in the Yukon Territory of Canada. In the late 1990's, a feasibility study was completed by prior owners, permits obtained and construction of an open pit mine commenced. During that period, the mill foundations were poured, the ball and SAG mills were purchased and moved to site, the mine accommodations were constructed and the site was connected to a permitted Yukon River crossing by a 29km production standard access road. Construction was suspended after expenditures of approximately $10 million, due to depressed copper prices. All of this infrastructure has been well maintained and would be available for future operations. The Type A and Type B Water Licences were recently renewed and permit a resumption of construction once a production decision has been made.

As announced June 27, 2005 and prior to the 2005 drill program, the Minto Project contained measured and indicated resources of 9.2 million tons at a grade of 1.8% copper, 0.016oz/t gold and 0.2oz/t silver, and an additional inferred resource of 0.8 million tons grading 1.4% copper, 0.013oz/t gold and 0.2oz/t silver. The mineral resources for the Minto Project were estimated by Giroux Consulting. Gary Giroux, P.Eng. is the Qualified Person under National Instrument 43-101 responsible for the estimate. A new resource estimate is in process that will incorporate the results of Sherwood's 2005 drill program.

Sherwood

Sherwood's successful consolidation of the ownership of the Minto Project provides a unique investment opportunity - participation in an already permitted, partially constructed, high-grade, open pit copper-gold project located in Canada with infrastructure and exploration potential on the 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 Corp.
    Stephen Quin
    President
    (604) 687-7545 or (888) 338-2200
    or
    Sherwood Copper Corp.
    Investor Relations
    (604) 687-7545 or (888) 338-2200
    www.sherwoodcopper.com