SOURCE: Terra Nostra Resources Corp.

August 18, 2005 09:00 ET

Terra Nostra Resources Corporation Closes China-Based Copper & Steel Joint Ventures

Terra Nostra Acquires 51% Stake in Copper and Stainless Steel Producers

LOS ANGELES, CA -- (MARKET WIRE) -- August 18, 2005 -- Terra Nostra Resources Corporation (OTC BB: TNRO) ("Terra Nostra") today announced the formal closing and acquisition of a 51% ownership stake in two major copper and stainless steel operations in the People's Republic of China: Shandong Terra Nostra Jinpeng Metallurgical Company, Ltd. ("STJMC") and Shandong Quanxin Stainless Steel Company ("SQSSC"), vis-à-vis two Sino-Foreign Joint Venture Agreements.

Terra Nostra's Sino-Foreign Joint Venture partner in copper is Shandong Jinpeng Copper Company ("SJCC"), a major producer of electrolytic copper cathode and oxygen-free rod with operations centered in Zibo City, the Province of Shandong. SJCC's scrap recycling centers and electrolytic copper mills first commenced production in 1994 and SJCC emerged as one of the top ten converters of scrap into high-grade copper finished product in the PRC. SJCC and its affiliates recorded 2004 net earnings of US$ 22.4 mm on sales that exceeded US$ 280 mm. Terra Nostra, vis-à-vis its current joint venture partnership with SJCC, is in advanced construction of a fifth copper mill to produce 80,000 MT of electrolytic copper cathode. This expansion will more than double current capacity and allow STJMC to qualify, subject to other conditions, for warehousing and trading of its electrolytic copper on the London Metal Exchange. 2004 finished copper production at SJCC and its affiliates was comprised of 53,000 MT electrolytic copper cathode, 18,000 MT oxygen-free copper rods / wire, and 25,000 MT low oxygen rods. The timing of Terra Nostra's joint venture with SJCC coincides with price spikes and robust demand in copper markets worldwide, portending potentially major revenue growth, with STJMC 2006 gross revenues expected to surpass the US$ 400 mm mark.

STJMC sources its scrap from a network of over 200 China scrap suppliers and enjoys strong customer relations -- forged over the last decade -- for the sale of its products in the domestic markets of China, and also enjoys secure domestic supplies of fuel oil, coal, and electricity.

Terra Nostra's Sino-Foreign Joint Venture partner in Shandong Quanxin Stainless Steel Co is also SJCC. The integrated stainless steel plant, operating out of Zibo City, employs electric-arc furnaces and will have a casting mill with initial production capacity of 180,000 MT. The stainless steel mill is scheduled to be operational prior to November 2005, with a downstream rolling mill to be phased in over the next two years having a design capacity comprising 90,000 MT of stainless steel rod, 60,000 MT of stainless steel strip, and 30,000 MT of stainless steel welded tube. Production volumes in 2006 should be sufficient to generate gross revenues of US$ 320 mm at SQSSC.

Terra Nostra's joint venture investments poise the company for potentially significant growth over the next decade as the mills expand production capacity to generate revenue and earnings in line with the following pro-forma forecasts:

--  STJMC/SQSSC consolidated revenues are projected to equal US$ 749 mm in
    2006 and US$ 862 mm by 2010;
    
--  STJMC/SQSCC consolidated EBITDA is forecast to equal US$ 108 mm in
    2006 and exceed US$ 130 mm, thereafter;
    
--  STJMC/SQSCC profit after tax will increase from US$ 22.4 mm in 2004 to
    an estimated US$ 117 mm in 2007, reflecting ramp-up of new production
    capacity.
    
"We are very excited to close these Sino-Foreign Joint Venture Agreements," remarked Terra Nostra President and CEO, William L. Melvin. "We have an experienced and successful joint venture partner in SJCC, a Shandong company that has increased revenues at a rapid pace over the last decade. The STJMC/SQSSC operations are environmentally responsible, and permit Terra Nostra to participate significantly in the construction of China's future. Together we will strive to achieve quality earnings growth for Terra Nostra and our excellent partners in China so as to enhance shareholder value."

ABOUT TERRA NOSTRA RESOURCES

Terra Nostra Resources Corp. is a publicly traded corporation with its shares listed for trading on the U.S. OTC/BB under the ticker symbol TNRO. More information on the company can be found at http://www.tnr-corp.com

This press release summarizes the joint venture closing, business and future potential of Terra Nostra Resources Corporation ("TNR"), a company dedicated to the production of ferrous, non-ferrous, and precious metals, contains certain forward-looking statements. Such forward-looking statements are based certain assumptions and estimates, including, without limitation, (i) estimates of future earnings, and the sensitivity of earnings to metals prices; (ii) estimates of future metals production and sales, (iii) estimates of future cash costs; (iv) estimates of future cash flows, and the sensitivity of cash flows to the other metals prices as well as, but not limited to, fluctuations in fuel prices, scrap prices, and the availability of both; (v) statements regarding future dividend distributions; (vi) estimates of future capital expenditures; (vii) statements related to projects underway or under consideration; and (viii) statements regarding modifications to TNR's hedge position, if any. Where TNR expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, the forward-looking statements included herein are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to, metals price volatility, competition for projects, reserve acquisition costs, currency fluctuations, international economic uncertainty, sovereign risk, force majeure, changes in tax law or concession law, project scheduling delays, labor disputes, increased production costs and variances in ore grade, scrap grade or recovery rates from those assumed in production plans, as well as political and operational risks in the countries in which TNR may operate and governmental regulation and judicial outcomes. Furthermore, metals operation, by their very nature, entail cyclical, sectoral, and commodity risk and could expose an investor to the entire loss of all capital invested. TNR does not undertake any obligation to release publicly any revisions to any forward-looking statement to reflect events or circumstances after the date of this presentation, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

Contact Information

  • For more specific financial information about Terra Nostra Resources Corp,
    please contact:
    Jeffery Reynolds
    Chief Financial Officer
    604-694-1110
    Email Contact