Tiomin Resources Inc.
TSX : TIO

Tiomin Resources Inc.

May 26, 2006 08:21 ET

Tiomin Announces Pricing of Public Offering

TORONTO, ONTARIO--(CCNMatthews - May 26, 2006) -

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

Tiomin Resources Inc. ("Tiomin" or the "Company") (TSX:TIO) announced today that it has priced the previously announced best efforts public equity offering (the "Offering") to raise approximately C$50 million to be used to construct and develop the Company's Kwale titanium mineral sands project in Kenya. The Offering will consist of approximately 166,666,667 Subscription Receipts at a price of Cdn.$0.30 per Subscription Receipt. Each Subscription Receipt will entitle the holder to acquire, for no additional consideration, one Common Share and one-half of one Series O common share purchase warrant of Tiomin (each whole Series O common share purchase warrant a "Warrant"). Each Warrant shall entitle the holder to acquire an additional common share at a price of $0.36 per common share for a period of 18 months. In addition, the Agents will be granted an option exercisable up until closing, to increase the size of the Offering by up to C$10 million.

Tiomin filed a preliminary short form prospectus with the securities regulatory authorities in certain of the provinces and territories of Canada in connection with the Offering on May 9, 2006 and an amended and restated preliminary short form prospectus with the securities regulatory authorities in all of the provinces and territories of Canada on May 17, 2006. The Offering is being made pursuant to a short form prospectus to be filed with security regulators in all provinces of and territories of Canada. Closing of the Offering is subject to normal regulatory approvals and is expected to occur on or about June 6, 2006.

Wellington West Capital Markets Inc. and Paradigm Capital Inc. are the co-lead agents with Jennings Capital Inc. participating in the syndicate for the Offering.

100% of the gross proceeds of the Offering will be deposited with Computershare Trust Company of Canada and held in escrow pending satisfaction of certain release conditions (the "Release Conditions"), including in particular the finalization and availability of Tiomin's previously announced senior debt facility in the amount of US$120 million and subordinated debt facility in the amount of US$35 million. If the Release Conditions are satisfied on or before July 31, 2006, the Subscription Receipts will be automatically exercised into common shares and Warrants and the escrowed funds will be released to the Company. If the Release Conditions are not satisfied on or before July 31, 2006, holders of Subscription Receipts will have the right to require Tiomin to redeem their Subscription Receipts for the issue price plus accrued interest, and the escrowed funds will be used to satisfy the redemption price for the Subscription Receipts which are redeemed.

The Company recently signed a mandate with three financial institutions to arrange and underwrite a debt facility of US$120 million. In addition, the Company has finalized terms with the Jinchuan Group Ltd. ("Jinchuan") for a US$35 million subordinated debt facility, subject to approval by the TSX and shareholders of the Company. Tiomin also recently closed a private placement of C$7.4 million with Jinchuan, who now holds approximately 9.9% of Tiomin's outstanding common shares. These funds combined with the proceeds of the Offering will be used mainly to complete the US$176 million project financing requirements for the construction and startup of the Kwale titanium mineral sands project in Kenya. The remaining funds will be used for payment of financing costs associated with the senior debt facility (estimated at US$20 million), termination of the Kenyan properties royalty interest, exploration work at its other titanium mineral sands properties and at its advanced-stage Pukaqaqa copper-gold project in Peru, and general corporate purposes.

The securities being offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States in the absence of registration or an applicable exemption from the registration requirements. This press release does not constitute an offer to sell or the solicitation of an offer to purchase securities in the United States.

Contact Information

  • Tiomin Resources Inc.
    Jean-Charles Potvin
    President
    (416) 350-3776 ext. 227
    or
    Tiomin Resources Inc.
    Bruce Ramsden
    Chief Financial Officer
    (416) 350-3776 ext. 232
    or
    Tiomin Resources Inc.
    Laurie Gaborit
    Investor Relations
    (416) 350-3776 ext. 222
    www.tiomin.com