Atalaya Mining Regulatory News (ATYM)

AIM: EMED 

TSX: EMD 24 June 2013

Subscription Agreements Signed in Connection with Conditional £9.6 Million Convertible Secured Loan Note Issue and Allocation of Additional Off-take Rights

Highlights

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

·; The Notes convert into Ordinary Shares at 9 pence per share which represents a premium of 58% over the current 5 day volume-weighted average price of the Ordinary Shares on AIM ("VWAP") immediately prior to the day the proposed financing was announced on 13 June 2013; and

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

EMED Mining Public Limited ("EMED Mining" or the "Company"), the Europe-based minerals development and exploration company, is pleased to announce that it has entered into subscription agreements with cornerstone customers, Yanggu Xiangguang Copper Co. Ltd ("XGC") and RK Mine Finance (Master) Fund II LP ("Red Kite") in relation to the proposed fundraising announced on 13 June 2013. The agreements set out the basis on which XGC and Red Kite have conditionally agreed to provide additional finance to the Company of £9.6 million (approximately US$15 million) and the increase of 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 35% to an aggregate of approximately 50%.

The fundraising is by way of the issue of £9.6 million (approximately US$15 million) nominal amount of convertible secured loan notes ("Notes"). The funds 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.

The terms of the transactions with XGC and Red Kite and of the Notes are set out below. The subscriptions by XGC and Red Kite and the grant of further off-take rights are subject, inter alia, to the approval of the Chinese National Development and Reform Committee ("NDRC") and the conditional approval of the Toronto Stock Exchange ("TSX"). Conditional approval has been received from the TSX, while NDRC approval is in progress.

Harry Anagnostaras-Adams, the Managing Director of EMED Mining said: "EMED Mining has reinforced its preparedness for the restart of the world class Rio Tinto Copper Project with site works targeted to start by year-end 2013, so that production can start in late 2014.

"The Convertible Loan financing demonstrates XGC's and Red Kite's continued support for the Company.

"The Company appreciates the support of its business plan from all shareholders. The wholly-owned Rio Tinto Copper Project is not just a mine but is a world class mining district and its restart and modernisation provides huge potential for all stakeholders for the long term."

Fundraising terms

The Company has entered into subscription agreements with each of XGC and Red Kite pursuant to which XGC (through a wholly-owned subsidiary) has conditionally agreed to subscribe for £7,026,800 (approximately US$11 million) of the Notes and Red Kite has conditionally agreed to subscribe for £2,555,200 (approximately US$4 million) of the Notes. These are different proportions to those set out in the announcement of 13 June 2013, although the aggregate fundraising size remains the same.

XGC and Red Kite have each entered into subscription agreements with the Company setting out the terms and conditions on which they have agreed to subscribe for the Notes. The conditions to these agreements (which are mentioned above) must be satisfied or waived by 31 July 2013. In addition, each of XGC and Red Kite has certain limited rights to terminate the subscription agreements prior to closing, including in respect of a material breach of warranty given by the Company.

The Notes will have a term of 18 months from the date of issue (the "Maturity Date") and will convert into new ordinary shares of 0.25 pence each in the Company ("Ordinary Shares") at a conversion price of 9 pence per share (the "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 Notes carry a coupon of 9% per annum in the first 12 months and 11% thereafter. Interest is capitalised every three months and will be rolled up, payable either on the Maturity Date or the earlier conversion or redemption of the Notes. In the event of conversion, interest is repaid in Ordinary Shares at the Conversion Price.

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 the period of 20 consecutive trading days immediately prior to the Drawdown Date (the "Market Price") is less than the Conversion Price, the Conversion Price will be the Market Price. The Notes are also convertible into Ordinary Shares or redeemable prior to the Maturity Date in other limited circumstances, including a change of control of the Company.

Assuming that the Notes convert in full at the Conversion Price (including the conversion of 18 months' accrued interest) then XGC would receive 90,101,498 Ordinary Shares and Red Kite would receive 32,764,181 Ordinary Shares. XGC's and Red Kite's resulting shareholdings would be 227,727,679 Ordinary Shares (representing approximately 17.4% of the issued share capital as enlarged by the conversion) and 96,593,968 Ordinary Shares (representing approximately 7.4% of the issued share capital as enlarged by the conversion) respectively.

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.

The Notes will benefit from security interests granted by EMED Mining over the share capital of EMED Holdings (UK) Limited and EMED Marketing Limited as well as certain intra-group debts owing to EMED Mining. In addition, EMED Mining and certain of its subsidiaries have undertaken not to further encumber their assets or share capital, save in certain circumstances, including in connection with the proposed senior debt facility required in order to restart operations at the Rio Tinto Copper Project.

The Notes are subject to certain standard events of default following which Note holders may elect to immediately redeem their Notes and accrued interest.

Off-take arrangements

The Company has agreed, conditional on closing the subscription for the Notes, to grant each of XGC and Red Kite additional off-take rights to purchase 1% of production from existing reported reserves for every US$1 million (approximately £638,800) of Notes subscribed for, on a proportional basis. The main commercial terms of the additional off-take rights are the same as the existing contracts with each of the parties.

The granting to XGC and Red Kite of further off-take rights over the Rio Tinto Copper Project's copper production based on reported life of mine reserves (as set forth in the Behre Dolbear Amended and Restated NI 43-101 Independent Technical Report dated 17 November 2010) (the "Off-take Rights"), will increase the committed allocation to 50.1% (XGC 32.6%; Red Kite 17.5%) of reported life of mine reserves. The proportion of initial base case production allocated to these two cornerstone customers would increase to 63.6% of reported life of mine reserves (XGC 32.6%; Red Kite 31.0%) if the Company elects to draw down a US$35 million standby facility that Red Kite conditionally agreed to underwrite or arrange in 2012.

Related Party Transaction

As XGC holds over 10% of the Company's current issued Ordinary Share capital, the transactions with XGC are "related party" transactions both pursuant to the AIM Rules for Companies and 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 is 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 specialises in providing development, acquisition and bridge financing to miners of

precious and non-ferrous metals. RK Mine Finance is part of the Red Kite Group, one of the largest metal merchants in the world. The Group has over $3.5 billion under management (as of 30 April 2013), with $1.7 billion dedicated exclusively to the mine finance business.

Red Kite provides mining companies with project financing and metal off-take agreements for initiation or expansion of mine production. 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, pension funds and other institutional investors. For more information about Red Kite please visit www.rkminefinance.com

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 Notes, the use of proceeds, TSX approval of the transactions, Chinese governmental approval of the transactions, the satisfaction or waiver of conditions to the definitive documentation in respect of the 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.