Kadywood Capital Corp.
TSX VENTURE : KDC.H

June 12, 2008 17:23 ET

The Creation of Gold Wheaton

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 12, 2008) -

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

Gold Wheaton Corp. ("Gold Wheaton", currently known as Kadywood Capital Corp.) (TSX VENTURE:KDC.H) is pleased to announce that it has entered into its first two transactions to acquire by-product gold and precious metal streams from producing and developing mines.

Gold Wheaton has:

- agreed to purchase 50% of the contained gold, platinum and palladium (the "gold equivalent ounces") in ore mined and shipped from certain of the existing mining operations wholly-owned by FNX Mining Company Inc. ("FNX") located in northern Ontario (the "FNX Gold Purchase Transaction"),

- entered into a letter of intent with Redcorp Ventures Ltd. ("Redcorp") pursuant to which Gold Wheaton has agreed to purchase 100% of the life of mine payable gold production from Redcorp's Tulsequah Chief Mine located in British Columbia and any other mines within a defined project area (the "Redcorp Gold Purchase Transaction"), and

- engaged Paradigm Capital Inc., as lead agent, together with Canaccord Capital Corp. and GMP Securities L.P. as co-bookrunners and a syndicate including BMO Capital Markets and Brant Securities Limited, to undertake a Cdn$200 million equity financing on a best efforts basis.

Based on the mine plans from FNX and Redcorp, Gold Wheaton expects to purchase approximately 30,000 ounces of gold equivalent production in 2008, growing to approximately 162,000 ounces in 2010. These two initial transactions should result in Gold Wheaton's annual production averaging approximately 100,000 gold equivalent ounces for the next ten years.

"Gold Wheaton will be a pure play on gold and related precious metal by-product production. We will have immediate strong income and cash flow and it is our intent to grow this business aggressively. Upon completion of these initial two transactions and the proposed equity financing, Gold Wheaton will be well positioned for growth with current cash flow and a project pipeline," commented David Cohen, Chairman and Chief Executive Officer of Gold Wheaton. "We welcome FNX as a major shareholder and look forward to their ongoing contribution as we grow the company."

Terry MacGibbon, Executive Chairman of FNX, stated: "This value-enhancing transaction creates a unique growth-focused vehicle which crystallizes the value of FNX's gold, platinum and palladium metals production. As well, the cash proceeds from the transaction provide FNX with greater financial flexibility to aggressively develop our high grade deposits without dilution to FNX shareholders. Importantly, this transaction has been structured to provide FNX with a greater than 40% shareholding in Gold Wheaton and, therefore, an opportunity to participate in the growth of this vehicle, which is essential to the value proposition for our own shareholders."

Terry Chandler, President and Chief Executive Officer of Redcorp, said: "The financing from Gold Wheaton will provide Redcorp with the necessary funding for the development of the Tulsequah Chief Mine. We are excited to be a part of the emergence of Gold Wheaton as a major new player in the Canadian mining industry and to have their support to achieve our goals."

Paradigm Capital Inc. has acted as financial advisor to Redcorp and BMO Capital Markets has acted as financial advisor to FNX with respect to the transactions.

Gold Wheaton Management and Directors

At or prior to the closing of the FNX Gold Purchase Transaction, the board of directors of Gold Wheaton will be reconstituted to include four directors, David Cohen, Frank Giustra, Terry MacGibbon and Francesco Aquilini. David Cohen will be appointed as the Chairman and Chief Executive Officer of Gold Wheaton and Kathleen Butt will be appointed as Chief Financial Officer of Gold Wheaton.

David Cohen is co-founder and Chairman of Eastern Platinum Ltd. and former president and Chief Executive Officer of Northern Orion Resources Inc.

Frank Giustra is currently President and Chief Executive Officer of Fiore Financial Corporation and was former Chairman of Endeavour Financial and Yorkton Securities Inc. Mr. Giustra was also a founder of Wheaton River Minerals Ltd. and Lions Gate Entertainment Corp.

Terry MacGibbon is the founder in its current form, the former President and Chief Executive Officer and currently the Executive Chairman of FNX. He is a registered professional geologist with over 35 years of international experience in the mining business and is a certified director, Institute of Corporate Directors, and a director of several Toronto Stock Exchange listed companies.

Francesco Aquilini is Managing Partner of Aquilini Investment Group, a private real estate investment firm with diverse holdings that include the Vancouver Canucks NHL franchise.

Kathleen Butt is a Chartered Accountant with over 15 years experience in the resource sector and a previous tax manager at Ernst & Young LLP (Vancouver).

Gold Wheaton has agreed to grant stock options to purchase an aggregate of up to 18,000,000 common shares at a price of Cdn$0.59 per share, exercisable for a period of five years, to directors, officers, consultants and employees of Gold Wheaton.

Conference Call Details

Gold Wheaton will host a telephone conference call on Friday, June 13, 2008 at 9:00 a.m. Eastern Time to discuss the Gold Purchase Transactions. The conference call may be accessed (other than by persons resident in the United States) by dialing 1-800-319-4610 or 1-604-638-5340. Further details regarding Gold Wheaton can be obtained from its website at www.goldwheaton.com.

The conference call will be archived for later playback until Thursday, June 19, 2008 and can be accessed (other than by persons resident in the United States) by dialing 604-638-9010 or 1-800-319-6413 and using the pass code 3504 followed by the number sign (#).

Cdn$200 Million Equity Financing

Gold Wheaton has engaged Paradigm Capital Inc., as lead agent, together with Canaccord Capital Corp. and GMP Securities L.P. as co-bookrunners and a syndicate including BMO Capital Markets and Brant Securities Limited, to sell, on a best efforts basis, by way of private placement, a minimum of 400 million subscription receipts ("Subscription Receipts") at a price of Cdn$0.50 per Subscription Receipt for gross proceeds of a minimum of Cdn$200 million (the "Offering") with an overallotment option of up to 15% of the issue, exercisable by notice in writing to Gold Wheaton not less than 48 hours prior to the closing. Insiders have committed to purchase over Cdn$30 million of the Offering.

Each Cdn$0.50 Subscription Receipt will entitle the holder to acquire one Gold Wheaton common share and one-half of one common share purchase warrant of Gold Wheaton, without payment of additional consideration. Each whole Gold Wheaton warrant will be exercisable for one Gold Wheaton common share at a price of Cdn$1.00 for a period of five years after the closing date. Gold Wheaton has applied to list the Gold Wheaton warrants on the TSX Venture Exchange and it is expected that they will be listed after the four month hold period has expired.

The net proceeds from the Offering will be used to fund the Cdn$175 million cash portion of the purchase price of the FNX Gold Purchase Transaction. The balance will be used to partially finance the Redcorp Gold Purchase Transaction and for working capital purposes. The gross proceeds will be held in escrow pending the completion of the FNX Gold Purchase Transaction and the receipt of all required approvals and consents to complete the transactions described herein (the "Release Conditions"). Unless consent of the Subscription Receipt holders is obtained, in the event that the Release Conditions are not satisfied on or before that date which is 90 days following the closing date (the "Release Deadline"), holders of the Subscription Receipts shall be entitled to receive, in exchange for such holders' Subscription Receipts, an amount equal to: (i) the aggregate purchase price paid for their Subscription Receipts; and (ii) a pro rata share of interest earned thereon between the closing date and the Release Deadline, with effect as of the third business day following the Release Deadline.

Completion of the Offering is subject to receipt of all necessary regulatory and other approvals, including the approval of the TSX Venture Exchange. It is anticipated that closing of the Offering will occur on or about July 8, 2008.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful. The securities have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

FNX Mining Operations

FNX mined and shipped ore containing approximately 16,750 gold equivalent ounces for the three months ended March 31, 2008 and approximately 46,951 gold equivalent ounces for the year ended December 31, 2007. FNX has only recently begun mining and bulk sampling of its high-grade Podolsky Mine and Levack Footwall Deposits, respectively. For further details, please see the annual information form of FNX for the year ended December 31, 2007 and FNX's Management's Discussion and Analysis of Results of Operations and Financial Condition and Interim Consolidated Financial Statements for the Three Months Ended March 31, 2008 available at www.sedar.com.

FNX Gold Purchase Agreement

Gold Wheaton will purchase 50% of the contained gold equivalent ounces in ore mined and shipped from the FNX Operations, being: (i) PM and 700 Deposits at the McCreedy West Mine; (ii) the Levack Footwall Deposit, Rob's Zone and 1900 Zone at the Levack Mine; and (iii) the 2000 and North Deposits at the Podolsky Mine (collectively, the "FNX Operations") for Cdn$400 million payable in cash, Gold Wheaton common shares, Gold Wheaton warrants and the lesser of (a) US$400 per gold equivalent ounce (subject to an inflationary adjustment three years after the anniversary date) and (b) the then prevailing market price per ounce of gold. The Cdn$400 million will be satisfied by the payment of Cdn$175 million in cash, the issue of 350 million Gold Wheaton common shares valued at Cdn$175 million and Cdn$50 million which will be paid six months following the closing of the FNX Gold Purchase Transaction by the issuance of Gold Wheaton warrants on the same terms and conditions as the warrants to be issued pursuant to the equity financing referred to above.

Closing of the FNX Gold Purchase Transaction is subject to execution of definitive agreements, completion of satisfactory due diligence (other than technical due diligence which has been completed) and receipt of all requisite regulatory approvals and third party consents, including acceptance by the TSX Venture Exchange.

Gold Wheaton will be provided with a right of first refusal on any future gold stream agreements or similar arrangements proposed to be entered into by FNX with respect to its properties in the Sudbury basin. FNX will have the right to participate in future equity offerings to maintain its pro rata interest in Gold Wheaton for a period of 18 months provided that it holds at least 10% of the then outstanding Gold Wheaton common shares.

Redcorp Mining Operations

Redcorp is currently constructing its 100% owned Tulsequah Chief Mine located in British Columbia. The Tulsequah Chief Mine is expected to commence production in the second half of 2009 and to produce approximately 50,000 ounces of gold per year. For further details, please see the annual information form of Redcorp for the year ended December 31, 2007 and Redcorp's Management's Discussion and Analysis and Results of Operations and Interim Consolidated Financial Statements for the Three Months Ended March 31, 2008 available at www.sedar.com.

Redcorp Gold Purchase Letter of Intent

Gold Wheaton will purchase 100% of the payable gold produced from the Tulsequah Chief Mine and any other mines within the defined project area developed in the future for US$90 million plus US$400 per ounce produced, subject to an inflationary adjustment.

The upfront payment to be made to Redcorp will be payable as to US$10 million on receipt of the required material environmental and operating permits and the balance on a drawdown basis once Redcorp has expended all funds (other than US$80 million) required to complete construction and commissioning of the Tulsequah Chief Mine and upon satisfaction of certain funding conditions. Gold Wheaton will also pay an ongoing per ounce payment to Redcorp equal to the lesser of (a) US$400 per ounce (subject to an inflationary adjustment in the fourth year after production commences) and (b) the then prevailing market price per ounce of gold.

Gold Wheaton will not be required to contribute to any capital or exploration expenditures in respect of Redcorp's mining operations, over and above the upfront payment. Redcorp will provide Gold Wheaton with a completion guarantee such that, if within the earlier of (i) 18 months of commencement of production and (ii) three years following the entering into of the agreement with respect to the Redcorp Gold Purchase Transaction, the Tulsequah Chief Mine is not producing a minimum of 75% of the payable gold as set out in Redcorp's feasibility study or June 2008 Control Budget or processing a minimum of 1,800 tonnes of ore per day at a recovery rate of not less than 70% as averaged over a rolling 120 days, then Gold Wheaton will have the option to require the return of that percentage of the upfront payment which is equal to that portion of the underproduction of gold relative to the feasibility study.

The Redcorp Gold Purchase Transaction is subject to (a) Redcorp receiving all necessary material permits to construct and operate the Tulsequah Chief Mine in accordance with Redcorp's Feasibility Study and June 2008 Control Budget, (b) Redcorp having entered into committed arrangements for sufficient additional financing to construct and commence commercial production at the Tulsequah Chief Mine, (c) receipt of any required regulatory approvals and third party consents, including the holders of Redcorp's 13% senior secured redeemable series D notes, and (d) the entering into of definitive agreements.

Gold Wheaton will be provided with a right of first refusal on any future gold stream agreements or similar arrangements proposed to be entered into by Redcorp.

Gold Wheaton Post-Transaction

Following the completion of the FNX Gold Purchase Transaction, and assuming completion of a Cdn$200 million equity financing, Gold Wheaton will have approximately 808 million common shares outstanding (on an undiluted basis) of which approximately 43% will be held by FNX.

In connection with the transactions, Kadywood Capital Corp. intends to change its name to Gold Wheaton Corp. and expand its board of directors to six persons.

The transactions cannot be completed until the required TSX Venture Exchange approval is obtained. There can be no assurance that the transactions will be completed as proposed or at all. Investors are cautioned that, except as disclosed in the materials to be prepared in connection with the transactions, any information released or received with respect to the transactions may not be accurate or complete and should not be relied upon. Trading in the securities of Gold Wheaton should be considered highly speculative. The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Mineral Reserves and Mineral Resources

The following tables set forth the estimated Mineral Reserves and Mineral Resources of each of the properties which are the subject matter of the FNX Gold Purchase Transaction as at December 31, 2007, as reported by FNX and are available at www.sedar.com under FNX's profile.



----------------------------------------------------------------------
FNX Mining Company Inc. Mineral Reserve and Mineral Resource Estimate
(1)(2)(3)(4)
----------------------------------------------------------------------

Grades Contained Metals
----------------------------------------------------------------------------
Deposit / Tons Cu Ni Pt Pd Au Cu Ni Pt Pd Au
Classif- (%) (%) (oz/ (oz/ (oz/ (000 (000 (000 (000 (000
ication ton) ton) ton) oz) oz) oz) oz) oz)
----------------------------------------------------------------------------
McCreedy
West
- Footwall
Deposit
----------------------------------------------------------------------------
Proven
&
Probable
Reserve 926,000 1.30 0.24 0.05 0.07 0.02 24.1 4.4 46.3 64.8 18.5
----------------------------------------------------------------------------
Measured
&
Indi-
cated
Resou-
rce 2,379,500 1.33 0.26 0.06 0.07 0.02 63.3 12.4 142.8 166.6 47.6
----------------------------------------------------------------------------
Inferred
Resource 380,000 0.95 0.30 0.08 0.12 0.02 7.2 2.3 30.4 45.6 7.6
----------------------------------------------------------------------------
Podolsky -
Footwall
Deposit
----------------------------------------------------------------------------
Probable
Reserve 326,100 7.32 0.64 0.06 0.08 0.02 47.7 4.2 19.6 26.1 6.5
----------------------------------------------------------------------------
Measured
&
Indi-
cated
Resou-
rce 2,254,000 4.50 0.40 0.06 0.06 0.02 202.9 18.0 135.2 135.2 45.1
----------------------------------------------------------------------------
Inferred
Resou-
rce 1,420,000 3.00 0.37 0.04 0.04 0.02 85.2 10.5 56.8 56.8 28.4
----------------------------------------------------------------------------

--------------------
(1) The Mineral Reserve estimates set out in the table above have been
calculated in accordance with the Canadian Institute of Mining,
Metallurgy and Petroleum ("CIM") - Definitions Adopted by CIM Council on
December 11, 2005 (the "CIM Standards") which were adopted by the
Canadian Securities Administrators' National Instrument 43-101 Standards
of Disclosure for Mineral Projects ("NI 43-101") by Catharine E.G.
Farrow, B.Sc. (Hons.), M.Sc., Ph.D., P.Geo., Vice President, Exploration
of FNX, and Mark Frayne, B.A.Sc., M.B.A., P.Eng., Manager of Engineering
- Technical Services and Business Development of FNX, who are qualified
persons under NI 43-101. Ms. Farrow and Mr. Frayne have reviewed and
approved the contents of this news release.
(2) Based on a gold price of US$400 per ounce, a platinum price of US$800
per ounce and a palladium price of US$350 per ounce.
(3) Mineral Reserves are included in Measured and Indicated Mineral
Resources.
(4) Numbers may not add up due to rounding.


Cautionary Note to Non-Canadian Investors Concerning Estimates of Measured, Indicated and Inferred Resources

This press release uses the term "Inferred" Resources. Non-Canadian investors are advised that while such term is recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize it. "Inferred Resources" have a great amount of uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Resources may not form the basis of feasibility or other economic studies. Non-Canadian investors are also cautioned not to assume that all or any part of an Inferred Mineral Resource exists, or is economically or legally mineable.

Cautionary Note Regarding Forward-Looking Statements

Safe Harbor Statement under the United States Private Securities Litigation Reform Act of 1995: Except for the statements of historical fact contained herein, the information presented constitutes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, including but not limited to those with respect to the price of gold, platinum or palladium, the timing and amount of estimated future production, costs of production, reserve determination and reserves conversion rates involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Gold Wheaton, FNX or Redcorp to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among other risks, risks related to the integration of acquisitions, risks related to international operations, risks related to joint venture operations, the actual results of current exploration activities, actual results of current reclamation activities, conclusions of economic evaluations and changes in project parameters as plans continue to be refined as well as future prices of gold, platinum or palladium, as well as those factors discussed in the sections entitled "Risk Factors" in the annual information forms of FNX and Redcorp, respectively, as filed on SEDAR. Although Gold Wheaton has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such 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 and accuracy of the content of this news release.

Contact Information

  • Gold Wheaton Corp.
    (currently known as Kadywood Capital Corp.)
    David Cohen
    Chairman and Chief Executive Officer
    (778) 373-0107
    or
    FNX Mining Company Inc.
    David Constable
    Vice President, Investor Relations
    (416) 628-5929
    or
    Redcorp Ventures Ltd.
    Terry Chandler
    President and Chief Executive Officer
    (604) 669-4775 ext 109
    or
    Redcorp Ventures Ltd.
    Troy Winsor
    Manager, Investor Relations
    (604) 466-8934 or 1-888-225-9662