Atalaya Mining Regulatory News (ATYM)

AIM: EMED 

TSX: EMD 13 June 2013

US$15 Million (approximately £9.6 Million) Proposed Convertible Secured Note and Allocation of Additional Off-take Rights

Highlights

·; US$15 million (approximately £9.6 million) to be raised through the issue of new convertible secured notes to XGC and Red Kite;

·; The Notes carry a conversion price of 9 pence per share which represents a premium of 58% over the current 5 day volume-weighted average price ("VWAP");

·; Proposed increase in the existing off-take arrangements with Red Kite and XGC.

In advance of its AGM, EMED Mining Public Limited ("EMED Mining" or the "Company"), the Europe-based minerals development and exploration company, is pleased to announce that the Company has entered into a term sheet with cornerstone customers, Yanggu Xiangguang Copper Co. Ltd ("XGC") and RK Mine Finance (Master) Fund II LP ("Red Kite"). The term sheet sets out the basis on which XGC and Red Kite propose providing additional finance to the Company of US$15 million (approximately £9.6 million) and increasing the Company's committed allocation of copper concentrate product expected to be recovered out of current ore reserves at its Rio Tinto Copper Project from 34% to an aggregate of 49%.

It is proposed that the fundraising will be by way of the issue of US$15 million (approximately £9.6 million) convertible secured loan notes ("Convertible Notes" or "Notes"). Any funds raised will be utilised by the Company to continue final permitting, preliminary restart activities at the Rio Tinto Copper Project and for general working capital purposes.

Completion of definitive agreements in relation to the fundraising and off-take arrangements is expected imminently and a further announcement will be made at this time. It is expected that the arrangements will be subject, inter alia, to the approval of the Chinese Government and conditional approval of the Toronto Stock Exchange.

The proposed terms of the arrangements with XGC and Red Kite and the terms of the Notes are set out below.

Harry Anagnostaras-Adams, the Managing Director of EMED Mining said: "The proposed arrangements with globally important copper-sector specialists XGC and Red Kite will form an important component of EMED Mining's support for long term development at the Rio Tinto Copper Project. We are heartened by XGC and Red Kite's continued support following the completion by them of further due diligence on all aspects of the project over the last couple of months and we expect to finalise documentation imminently.

"We believe the continued support of sophisticated mining investors once again highlights the project's potential."

Harry Liu, Vice President of XGC, said: "XGC remains confident of the re-start of the Rio Tinto Copper Project, and is pleased to reinforce its support of the Company to achieve the desired timetable in full collaboration with the authorities."

Fundraising terms

XGC intends to subscribe for US$10 million (approximately £6.4 million) of the Notes and Red Kite intends to subscribe for US$5 million (approximately £3.2 million) of the Notes.

The Notes will have a term of 18 months from the date of issue and will convert into new ordinary shares in the Company ("Ordinary Shares") at a conversion price of 9 pence per share ("Conversion Price") which represents a premium of 58% over the VWAP of the Ordinary Shares on AIM for the 5 trading days immediately prior to the signing of the term sheet on 12 June 2013.

The Convertible Notes carry a coupon rate of 9% per annum in the first 12 months and 11% thereafter.

All outstanding principal and accrued interest of the Notes will automatically convert into new Ordinary Shares at the Conversion Price at the time the Company (or any of its subsidiaries) makes its first drawdown (the "Drawdown Date") from the facility to be made available by senior financial institutions for the restart of operations at the Company's Rio Tinto Copper Project in Andalucía, Spain. If on the Drawdown Date the VWAP of the Ordinary Shares over a period of 20 consecutive trading days prior to the Drawdown Date is less than the Conversion Price, the Conversion Price will be the VWAP.

The Company will have the right to repay the Notes at any time following the first anniversary of the date of issue upon giving the holders of the Notes not less than 15 business days' notice, subject to the right of Note holders to elect prior to the expiry of the notice to convert their Notes into Ordinary Shares at the Conversion Price.

Off-take arrangements

It is proposed that off-take rights to purchase 1% of production from existing reported reserves will be granted to XGC and Red Kite for every US$1 million (approximately £ 0.64 million) of Notes subscribed for, on a proportional basis, with the main commercial terms of such grants being the same as the pre-existing contract.

The proposed granting to XGC and Red Kite of further off-take rights over the Rio Tinto Copper Project's copper production based on current reported life of mine reserves from the planned initial operations (the "Off-take Rights"), will increase the committed allocation to 49% of current ore reserves. The proportion of initial base case production allocated to these two cornerstone customers would increase to 62.5% if the Company elects to draw down a US$35 million standby facility provided by Red Kite in 2012.

As XGC holds over 10% of the Company's current issued Ordinary Share capital, it is classified as a "related party" under the AIM Rules for Companies and the transactions with XGC are "related party" transactions as defined in Multilateral Instrument 61-101, of the Canadian Securities Administrators ("MI 61-101"). The transactions with XGC are exempt from the requirement to obtain a formal valuation and minority shareholder approval pursuant to MI 61-101 as the value of the transactions are less than 25% of the market capitalisation of the Company. With the exception of Harry Liu, who is involved in the transaction as a Vice President of XGC only, and was not involved in discussions with respect to the transactions at the board level in his capacity as a director of EMED Mining, the directors of EMED Mining consider, having consulted with its nominated adviser RFC Ambrian Ltd, that the terms of the proposed transaction are fair and reasonable insofar as its shareholders are concerned.

Background to XGC and Red Kite

XGC is a large copper smelting group based in China and Red Kite is a major international commodities group. Their respective increased commitments reinforce the Company's existing strong shareholder base dominated by European, North American and Australian global mining investment institutions. This supports the Company's long term plans for production and development at the Rio Tinto Copper Project, starting with redevelopment of the current reserves at the Cerro Colorado Open Pit.

RK Mine Finance provides mining companies with project financing and metal off-take agreements for initiation or expansion of mine production and is part of the Red Kite group. Red Kite operates across the global metals industry from offices in Bermuda, Denver, Hong Kong, London, New York, Shanghai and Sydney. Investors in Red Kite funds include college endowments, foundations, family offices, pensions and other institutional investors.

Enquiries

Cautionary Notes

This announcement contains "forward looking information" which may include, but is not limited to, statements with respect to the completion of the issue of the Convertible Notes, the use of proceeds, TSX approval of the transactions, Chinese governmental approval of the transactions, the execution of definitive documentation in respect of the Convertible Notes and the ability of the Company to fulfill its expanded off-take obligations. "Forward looking information" may also include statements with respect to the future financial or operating performance of the Company, its subsidiaries and its projects, the future price of metals, the estimation of ore reserves and resources, the conversion of estimated resources into reserves, the realisation of ore reserve estimates, the timing and amount of estimated future production, costs of production, capital, operating and exploration expenditures, costs and timing of the development of new deposits, costs and timing of future exploration, requirements for additional capital, government regulation of mining operations, environmental risks, reclamation expenses, title disputes or claims, limitations of insurance coverage and the timing and possible outcome of pending litigation and regulatory matters. Often, but not always, forward looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Accordingly, readers should not place undue reliance on forward looking statements.

Forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements. Such factors include, among others, general business, economic, competitive, political and social uncertainties; the actual results of current exploration activities; actual results of reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of metals; the future costs of capital to the Company; possible variations of ore grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; political instability, terrorist attacks, insurrection or war; delays in obtaining governmental approvals or financing or in the completion of development or construction activities, as well as those factors discussed in the section entitled "Risk Factors" in the Company's annual information form.

Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward looking statements contained herein are made as of the date of this announcement and the Company disclaims any obligation to update any forward looking statements, whether as a result of new information, future events or results or otherwise. There can be no assurance that forward looking 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