St Andrew Goldfields Ltd.
TSX : SAS

St Andrew Goldfields Ltd.

April 21, 2009 16:56 ET

St Andrew Completes US$16.2 Million Private Placement Debt Financing

OAKVILLE, ONTARIO--(Marketwire - April 21, 2009) -

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

St Andrew Goldfields Ltd. (TSX:SAS) - ("St Andrew" or the "Company") is pleased to announce that it has closed today a private placement of US$16.2 million of Senior Secured Gold Notes. The proceeds will be used by the Company to put its Holloway mine into production, to advance exploration and mine development of its Hislop Project and for general corporate purposes.

The Gold Notes are non-interest bearing and are secured by the Company's Holloway and Holt mines and a general security interest on the Company's personal property located at or related to the Holloway and Holt mines. The Gold Notes will rank pari passu with the Company's existing secured debentures. The Gold Notes are repayable by St Andrew delivering to investors a total of 32,400 ounces of gold from future production from its Timmins Mining Camp, payable in quarterly instalments over a three-year period, with the first instalment payable on December 31, 2009. Under the terms of the Gold Notes, St Andrew is required to deliver 1,296 ounces of gold to investors on December 31, 2009, a total of 9,720 ounces of gold in each of 2010 and 2011 and a total of 11,664 ounces of gold in 2012, with the final payment due on December 31, 2012. The Gold Notes also provide that if on any of the repayment dates, the spot price of gold is less than US$750 per ounce, St Andrew will deliver to the investors, in addition to the required gold, a cash payment per ounce equal to the difference between US$750 and the spot price of gold on the delivery date. A director of St Andrew and members of his family purchased US$1 million of the Gold Notes. A finder's commission of US$520,000 is payable in cash to Trapeze Capital Corp., an insider of St Andrew.

In connection with the financing, the holders of $7,860,000 principal amount 10% secured debentures have agreed to have their security on the Holloway-Holt Project rank equally with the Gold Notes and to extend the maturity date of the debentures by one year from December 31, 2009 to December 31, 2010. In consideration therefor, the interest rate of the debentures has been increased from 10% to 12% per annum effective April 1, 2009, and the Company has issued to those debenture holders, common share purchase warrants, for 3,930,000 common shares exercisable at a price of $0.44 per share until December 31, 2010. These debentures are currently held by Technifund Inc., a corporation controlled by Herbert Abramson, the Chairman of St Andrew, and by Trapeze Asset Management Inc. and Trapeze Capital Corp. (collectively "Trapeze") on behalf of certain managed accounts. Trapeze is controlled by Randall Abramson, the son of Herbert Abramson. The Company will retire the remaining $140,000 principal amount of the secured debentures from proceeds of the Gold Notes placement.

Holloway-Holt Project

As announced on March 25, 2009, the Company believes that it will take approximately 6 months to complete the required pre-production activities at the Holloway mine and attain a gold production of approximately 120,000 ounces through the tenure of the above Gold Notes financing. The start up of the Holt mine will commence once the royalty issue is satisfactorily resolved and will also be subject to the Company generating sufficient internal cash flow or receipt of adequate financing.

The economics of the Holloway mine have been further improved after Franco-Nevada Corp., one of the royalty interest holders on the Holloway property, agreed to amend the existing sliding scale NSR royalty interest to give effect to a lower royalty burden on the Holloway mine at current gold price in return for a higher royalty when the price of gold is above US$1,600 per ounce. Under a current spot gold price of approximately US$889 per ounce, the subject royalty would be reduced by half from 6% to 3%. The Company will grant Franco-Nevada a further 1% NSR royalty on its Aquarius property when the spot price of gold is above US$1,000 per ounce.

Hislop Project

As announced on April 8, 2009, the Company is encouraged by the results of its exploration program at the Hislop Project and reports that the timeline for the completion of an updated National Instrument 43-101 technical report on the Hislop property by the end of the second quarter of 2009 is on schedule. The Company anticipates that any future mining of the Hislop low grade gold mineralization occurring near surface could be processed at the Holt mill augmenting the processing of Holloway's high grade ore.

To further finance the development of this project and the start up of the Holloway mine, the Company has granted Franco-Nevada a 4% NSR royalty interest on future gold production from the Hislop Project for gross proceeds of US$4 million. The transaction is expected to close on or before May 1, 2009.

"We are pleased to have completed the financing necessary to put the Holloway mine into production in these difficult times in the world capital markets without diluting our shareholders," said Jacques Perron, President and CEO of St Andrew. "We are also very encouraged by the early exploration results of the Hislop Project and are confident that this asset will add value to the overall success of St Andrew as it becomes a gold producer in the Timmins Mining Camp in the near future."

About St Andrew

St Andrew is a gold mining and exploration company with operations in Timmins, Ontario. St Andrew controls a large land position in the Timmins Mining Camp and an extensive land position at Eskay Creek in northern British Columbia.

FORWARD LOOKING STATEMENTS

This news release contains forward-looking information under applicable securities laws, concerning St Andrew's business, operations, financial performance, condition and prospects, as well as management's objectives, strategies, beliefs and intentions. Forward looking information is frequently identified by such words as "may", "will", "plan", "expect", "anticipate", "intend" and similar words referring to future events and results, including in respect of the intended use of proceeds of the Gold Note financing and the repayment thereof, the time necessary for pre-production activities and the restart of mining at the Holloway mine, the resolution of the Holt royalty issue and the restart of mining at the Holt mine and the intention and timing necessary to complete a resource estimate and prefeasibility study of Hislop, the subsequent development of production at Hislop and the use of the Holt mill. This forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those implied by the forward looking information. Factors that may cause actual results to vary materially include, but are not limited to, inaccurate assumptions concerning the exploration for and development of mineral deposits, delay or inability to raise additional financing on satisfactory terms, currency fluctuations, unanticipated operational or technical difficulties, changes in laws or regulations, the risks of obtaining necessary licenses and permits, changes in general economic conditions and changes in conditions in the financial markets. Readers are cautioned not to place undue reliance on this forward-looking information as actual results may differ materially from those expressed or implied in the forward looking information. St Andrew does not assume the obligation to revise or update this forward-looking information after the date of this release or to revise such information to reflect the occurrence of future unanticipated events, except as may be required under applicable securities laws.

Contact Information

  • St Andrew Goldfields Ltd.
    Jacques Perron
    President and CEO
    1-800-463-5139 or (905) 815-9855
    (905) 815-9437 (FAX)
    jperron@standrewgoldfields.com
    or
    St Andrew Goldfields Ltd.
    Ben Au
    CFO and VP Finance & Administration
    1-800-463-5139 or (905) 815-9855
    (905) 815-9437 (FAX)
    bau@standrewgoldfields.com