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

Sherwood Copper Corporation

February 29, 2008 12:38 ET

Sherwood Signs Committed Term Sheet for Corporate Credit Facility with Macquarie Bank

Enters into Funding Arrangements with Western Keltic Mines for Advancement of Kutcho Project

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 29, 2008) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES -

Sherwood Copper Corporation (TSX VENTURE:SWC)(TSX VENTURE:SWC.DB) ("Sherwood") today announced that it has signed a committed term sheet with Macquarie Bank Limited ("Macquarie") for a C$10 million revolving corporate credit facility (the "CCF") with an initial term of one year, renewable at Sherwood's option with the consent of Macquarie. Funds will primarily be used for the closing costs related to Sherwood's acquisition of Western Keltic Mines Inc. ("Western Keltic"), funding for Western Keltic's accounts payable and closing costs and to advance the Kutcho Project toward a production decision. In order to facilitate the flow of funds between Sherwood and Western Keltic, Sherwood has entered into a secured loan agreement with Western Keltic whereby, subject to certain conditions, Western Keltic can borrow funds from Sherwood in order to meet Western Keltic's financial obligations. In addition, on February 15, 2008, Sherwood announced a flow through share issue in the amount of C$7.2 million, primarily to be spent on the Kutcho Project. In order to allow the expenditure of Sherwood's flow through funds on the Kutcho Project, Sherwood and Western Keltic have entered into an agency agreement whereby Sherwood can fund exploration on Kutcho and renounce the tax benefits to the placees in its flow through share placement. All transactions between Sherwood and Western Keltic were reviewed and approved, on Western Keltic's behalf, by its current board of directors.

"Now that Sherwood has acquired 91.7% ownership of Western Keltic, owner of the high grade Kutcho copper-zinc-gold-silver deposit in north-western British Columbia, Sherwood has begun the process of reassessing the development options for the deposit," said Stephen Quin, President & CEO of Sherwood. "Combined, the C$7.2 million flow through issue and C$10 million revolving credit facility provide Sherwood with the necessary financing flexibility 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 signed a committed term sheet with Macquarie for a C$10 million revolving corporate credit facility (the "CCF") with a term of one year. The term 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 previously agreed to issue Macquarie two-year warrants to purchase 755,405 common shares of Sherwood at a price of $5.25 per share, subject to regulatory approval. Closing of the CCF is expected to occur on or about March 7, 2008 and is subject to regulatory approval.

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, dealing with outstanding accounts payable, funding the advancement of the Kutcho Project and for general corporate purposes.

Advances to Western Keltic will be 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.

Flow-through Agency Agreement

Upon closing of the flow-through share private placement by Sherwood, previously announced in a press release dated February 15, 2008, a portion of the gross proceeds from the private placement 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 to be 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.

Grant of Incentive Options

During the past week, Sherwood has granted a total of 650,000 incentive stock options at prices ranging from $5.35 to $5.57 per share, including a maximum of 210,000 incentive options at $5.57 to officers of Sherwood and directors of Sherwood's wholly owned subsidiary, Minto Explorations Ltd.

Sherwood

Sherwood Copper's primary 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 February 2008, Sherwood acquired more than 90% 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 success with the Minto project 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

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