Sherwood Copper Corporation
TSX VENTURE : SWC

Sherwood Copper Corporation

December 22, 2006 07:00 ET

Sherwood Reports Significant Progress on Providing Grid Power to its Minto Project

Terms for Extension of Transmission Grid and Power Rates Agreed with Yukon Energy Corp.

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Dec. 22, 2006) - Sherwood Copper Corporation (TSX VENTURE:SWC) today announced that its wholly owned subsidiary, Minto Explorations Ltd. ("MintoEx") has agreed to terms with Yukon Energy Corporation for the provision of grid power to its 100% owned Minto high-grade copper-gold deposit in the Yukon.

Currently, the Whitehorse-Aishihik-Faro electric grid terminates just north of Carmacks and, if approved, the transmission lines would be extended via a 138 KV transmission line to Minto Landing and a 35 KV transmission line to the Minto Project.

"Grid power, provided from Yukon Energy's Whitehorse hydroelectric grid, could significantly reduce the electrical power costs for the Minto Project versus on site diesel generation," said Stephen Quin, President & CEO of Sherwood. "This agreement is a material step forward in the process toward a win-win situation for all stakeholders: the Minto Project would benefit Sherwood's shareholders with lower operating costs and therefore higher profits, thus paying higher taxes and royalties to the Yukon Government and, through them, the Selkirk First Nation, while Yukon Energy would gain infrastructure and a stream of revenue by utilizing hydroelectric capacity that is surplus to current customers' needs." In addition, Sherwood has agreed to take or pay terms and provision for security, subordinate to its bank financing, which will help Yukon Energy protect its customers from any rate impact that might otherwise arise from the transmission line extension.

Grid Power Benefits

Access to the electrical power from the Yukon Energy's Whitehorse-Aishihik-Faro grid would enable Sherwood to significantly reduce its electrical power costs for the Minto Project. The estimated benefit may be in the order of $3 to $4 million per year for the life of the mine, which equates to C$0.07 to C$0.10 per pound of copper produced at the average production rate of 41 million pounds of copper in the first six years of operations.

Yukon Energy Letter of Intent

The previous letter of intent discussed in a press release March 27, 2006 has been superseded by a term sheet which sets out more definitively the essential elements of a Power Purchase Agreement ('PPA') to be negotiated between Yukon Energy and Sherwood's wholly owned subsidiary, Minto Explorations Ltd. ('MintoEx'), for the supply of electricity from the Whitehorse-Aishihik-Faro transmission grid.

Yukon Energy Term Sheet

The rates for electrical power supply are set out in the term sheet and are expected to provide power at an estimated $0.10 per KWh, which if approved by the Yukon Utilities Board, would provide some degree of power rate certainty to MintoEx.

MintoEx would be provided an opportunity to nominate a lower demand for energy through the time of the Yukon Energy system peak in the winter, providing an avoided cost benefit to both parties worth approximately $0.005 per KWh to MintoEx.

MintoEx would also be provided an opportunity to purchase interruptible power for the processing of its low grade ore at rates estimated at $0.06 per KWh without priority and $0.076 per Kwh with priority, potentially increasing the likelihood that the low grade ore will be economic to process and providing added revenue benefits to both parties.

As part of the agreement, Yukon Energy would be provided with the right to acquire the diesel units currently at the Minto Project for the purpose of providing peak power to its system and potentially energy if required, while providing reliability benefits to Minto.

Over the term of the agreement, MintoEx would pay for the cost of the transmission spur line to the Minto mine site, estimated to be about $3.8 million and contribute $7.2 million to the construction of the 138 KV transmission line extension. As well, MintoEx would commit to a $24 million take or pay arrangement for power supply. This will enable Yukon Energy to ensure that there are sufficient funds to cover its transmission line construction costs and thereby assure its other customers with protection from any potential rate impacts that might otherwise arise from the construction of the transmission line.

MintoEx would provide security for the above commitments through a charge against its Minto Project assets, which will be subordinate to the security currently held by Macquarie Bank Limited. This will ensure that Yukon Energy is able to finance the transmission line construction and assure its Board and regulators that it will collect on the MintoEx commitments.

MintoEx has also committed to provide regular annual contributions toward a fund to cover decommissioning costs at the end of the mine life.

The term sheet is subject to a number of conditions, including commercial operation of the mine, firm construction tenders for the transmission lines, permit granting of required licenses, approvals, consents and rights-of-way, a final PPA between Yukon Energy and MintoEx, and Yukon Utilities Board approval of the PPA and rate terms.

Yukon Energy is targeting delivery of grid power to the Minto Project by the end of 2008.

Minto Project

The Minto Project is a high-grade copper-gold deposit located in the Yukon Territory of Canada. The mine development is now approximately 50% completed and is on target to move into production in the second quarter of 2007. Agreement on the terms in this term sheet enhances the potential to complete the PPA with Yukon Energy and would lead to a significant contribution to enhancing the economic benefits from the mine for the shareholders as well as for the Yukon community stakeholders.

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.
    Brad Kopp
    Investor Relations
    (604) 687-7545 or (888) 338-2200
    or
    Sherwood Copper Corp.
    Kristy Reynolds
    Investor Relations
    (604) 687-7545 or (888) 338-2200
    Website: www.sherwoodcopper.com