Pacific Road Capital Management

May 15, 2009 08:11 ET

Substantial Shareholder of Timmins Gold Advises That Board Allowed Expiry of a Superior Equity Financing Offer

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 15, 2009) - It is with regret that Pacific Road Capital Management ("Pacific Road"), manager of funds which have invested $19.3 million of equity in Timmins Gold Corp. ("Timmins" or the "Company") announces that the board of directors of Timmins allowed on May 8, 2009, the expiry of a financing proposal from Pacific Road, despite the fact that it fulfilled the equity needs of Timmins and was on terms superior to the first two closed tranches of its announced March 2, 2009 financing. The purpose of the financing is the essential capital works and working capital for the reopening of the San Francisco gold mine in Sonora State, Mexico.

The financing offer made by Pacific Road and presented to the board of directors on May 6, 2009 was for an aggregate of up to CAD$7.5 million. It provided a guaranteed closing date, committed funds and superior pricing on the units. The Pacific Road offer included an arrangement fee (including all legal and advisory fees of the investors) below those fees paid by Timmins on its last two tranches. Pacific Road's most recent offer is the fourth that it has made to invest in the Company since becoming a shareholder of Timmins. On March 2, 2009, management announced an equity offering of $10 million on Board-approved terms. To this date, the Company has only raised $4.96 million of equity, at terms substantially below those originally announced.

The management of Timmins has not to date adequately conducted the affairs of the Company in a manner which addressed the financing requirements of the Company and its projects. No notice has yet been given by the Company in response to a request from two of its directors for a meeting of the board to be held on Tuesday, May 19, 2009. As a result, the two directors of Timmins have been obliged to make yet another request for a meeting of the board of the Company to be held on or before Friday, May 22, 2009 to consider the financial position of Timmins and other issues related to management of the Company and its corporate governance.

"As cornerstone shareholders of Timmins, we cannot see how these decisions by management could be in the interests of stakeholders and value maximization of the Company in these highly uncertain capital markets," said Paul Espie, principal of Pacific Road.

"We have significant investment in Timmins and our objective is to see the San Francisco project brought to successful production without any further delay," said Mr. Espie.

About Pacific Road:

The Pacific Road Resources Funds are private equity funds investing in the global mining industry. They provide expansion and buyout capital for mining projects, mining-related infrastructure and mining services businesses located throughout resource-rich regions of the world. The Pacific Road Resources Funds are managed and advised by Pacific Road. The Pacific Road team, located in Sydney, Australia and San Francisco, USA, is comprised of experienced investment professionals that have extensive knowledge and experience in the mining and infrastructure sectors. For further information about Pacific Road, please go to their website at www.pacroad.com.au.

Contact Information

  • Jacob & Company Securities Inc
    Advisors to Pacific Road
    Susan McArthur
    (416) 866-8307