Griffin Mining Regulatory News (GFM)

22 Apr 2008 07:00

Griffin Mining Ld22 April 2008 GRIFFIN MINING LIMITED 60 St James's Street, London SW1A 1LE, United Kingdom Telephone: + 44 (0)20 7629 7772 Facsimile: + 44 (0)20 7629 7773 E mail: griffin@griffinmining.com 22nd April 2008 PROPOSED ACQUISITION OF YUKON ZINC CORPORATION Griffin Mining Limited ("Griffin" or "the Company"), is pleased to announce thatit has signed an agreement ("the Agreement") with Yukon Zinc Corporation ("YukonZinc") for the acquisition of all the issued common stock of Yukon Zinc. YukonZinc Corporation is listed on the TSX Venture Exchange (YZC.TSX-V). SUMMARY Griffin will have the following attributes after completion of the transaction: • A strong balance sheet with over $200 million in cash and no debt; • A 60% interest in the low-cost Caijiaying zinc-gold-silver-lead mine in Hebei Province in the People's Republic of China; • A 100% interest in the high grade advanced zinc-silver-copper-gold-lead Wolverine Project located in Yukon Canada; • Upon the Wolverine Project achieving full production status, projected annual zinc production in concentrates from Caijiaying and Wolverine is expected to be in excess of 150 million pounds and annual payable silver production in excess of 4.5 million ounces. There will also be significant quantities of copper, gold and lead produced; and • Exciting exploration and development potential surrounding the Caijiaying mine in China and in the Finlayson District of the Yukon plus other earlier stage exploration properties. TRANSACTION The Agreement provides for a plan of arrangement pursuant to section 288(1) ofthe British Columbia Business Corporations Act, in which the Yukon Zincshareholders will exchange their Yukon Zinc shares for ordinary shares ofGriffin, on the basis of one Griffin share for each nine Yukon Zinc shares held,after which Yukon Zinc will be a wholly owned subsidiary of Griffin. The plan of arrangement will be submitted to the Yukon Zinc shareholders forconsideration at a special general meeting at which the approval of two thirdsof those shareholders attending and voting will be required in order to proceedwith an interim order of the Supreme Court of British Columbia for the exchangeto be effected. The final structure of the transaction will be determined on the basis of tax,securities and corporate law advice in order to ensure the most efficientstructure for each of the parties and their respective security holders. YukonZinc has agreed to pay a break fee to Griffin, under certain circumstances, ofC$2.5 million. Yukon Zinc has also provided Griffin with certain othercustomary rights, including a right to match competing offers. No change to the Board of Directors of Griffin is contemplated. Under theAgreement, Yukon Zinc must use its reasonable best efforts to maintain andpreserve its organization, including its current management staff. Yukon Zinc has issued and outstanding 455,606,909 common shares for whichGriffin will issue and exchange 50,622,990 (subject to roundings) new ordinaryshares amounting to 16.2% of the enlarged share capital on an undiluted basis of312,132,539 ordinary shares. The consideration shares to be issued would bevalued at £45,307,576 based upon the closing price of Griffin's shares on 21April 2008 of 89.5p. In addition Yukon Zinc has granted stock options exercisable for 23,578,000common shares and warrants exercisable for 76,511,618 common shares. Under theterms of the Agreement, Griffin will grant options / warrants exercisable over atotal of 11,121,069 new ordinary shares in exchange for the outstanding YukonZinc options and warrants, amounting to 3.2% of the enlarged share capital on afully diluted basis of 338,728,608 ordinary shares. There is no cash consideration, as Griffin's financial resources are beingretained for the development of Yukon Zinc's projects and for other corporatepurposes. RATIONALE OF PROPOSED TRANSACTION Griffin has successfully constructed and brought into production its Caijiayingzinc, gold silver, lead underground mine in Northern China, on time and tobudget. Caijiaying now operates as a low cost profitable mine. With cash of inexcess of $200 million and no debt, Griffin has the funds and expertise to bringYukon Zinc's 100% owned Wolverine zinc-copper-lead-silver-gold underground mineinto production in a similar climate to that at Caijiaying. This will giveGriffin a second project in a separate geographical area and enhance itsexisting management team. INFORMATION ON YUKON Yukon Zinc is based in Vancouver Canada. The Company is one of the largestlandholders in the Yukon, and has exploration rights in two of Canada's emergingmining areas, the Finlayson and Rancheria districts. It's most advanced project is its 100% owned Wolverinezinc-copper-lead-silver-gold deposit which Yukon Zinc is seeking to bring intoproduction. A bankable feasibility was completed for the Wolverine Project byWardrop Engineering in January 2007 indicating favourable project economics. TheProject has all of its main development permits and enjoys strong support fromthe Yukon Government and its local First Nations communities. Yukon Zinc has completed a proven 43-101 Resource and Optimized FeasibilityStudy and all major permits are in place. Wolverine is expected to be a low costproducer as it contains high grade zinc and a large resource of silver alongwith gold, copper and lead. Initial mine site construction has commenced. Following the 2005 drilling program, a new Canadian National Instrument 43-101compliant mineral resource estimate was made for the Wolverine deposit. Measured& Indicated resources are 4.46 million tonnes grading 12.14% zinc, 354.8 gramsper tonne silver, 1.16% copper, 1.69 grams per tonne gold and 1.58% lead (atUS$80 cut-off). Inferred resources are 1.69 million tonnes containing 12.16%zinc, 385.4 grams per tonne silver, 1.23% copper, 1.71 grams per tonne gold and1.74% lead (at the same cut-off). The Inferred resources are in the deeperportion of the deposit and require additional in-fill drilling to improveresource confidence. Wolverine Deposit Resource as of January 10, 2006 Resource Category Tonnes Zinc (%) Silver (g/t) Copper (%) Gold (g/t) Lead (%)Measured 493,000 12.44 298.8 1.18 1.50 1.48Indicated 3,968,000 12.10 361.8 1.16 1.72 1.59Total 4,461,000 12.14 354.8 1.16 1.69 1.58Inferred 1,693,000 12.16 385.4 1.23 1.71 1.74 The new resource estimate was prepared by Independent Qualified Persons (within the meaning of NI 43-101) Gary Giroux,P.Eng. of Giroux Consultants Ltd. of Vancouver, BC, and Mr. Cliff Pearson, P.Geo. of Pearson Geological Ltd. ofVictoria, BC. Source Yukon Zinc. 100% attributable. Wolverine Deposit Reserves as of May 9, 2006 Reserve Category Tonnes Zinc (%) Silver (g/t) Copper (%) Gold (g/t) Lead (%)Proven 583,043 10.01 241.9 0.94 1.22 1.21Probable 4,625,303 9.50 283.8 0.90 1.35 1.25Total 5,208,346 9.71 284.2 0.93 1.37 1.26 Mr. Richard Goodwin. P.Eng. was the Qualified Person for the Mining Section of the feasibility study; Mr. Al Polk,P.Eng. of Snowden MIC was acting as the Independent Qualified Person. Source Yukon Zinc. 100% attributable. Yukon Zinc reported total assets of C$66,404,975 as at 30th September 2007. Mladen Ninkov, Chairman of Griffin, stated "This transaction fulfills thestringent economic and geological and political criteria the Company has imposedupon itself. Yukon Zinc will add a high grade, profitable mine to Griffin'sportfolio and add extensive exploration acreage in one of the most exciting basemetals regions in the world. The returns for existing Griffin shareholders andour new Griffin shareholders through Yukon Zinc will be very exciting. Wecouldn't be more pleased." Harlan Meade, President and Chief Executive Officer of Yukon Zinc, said "Thetransaction with Griffin will result in the development of the Wolverinedeposit, which is projected to become a very low cost producer. Yukon Zinc'sexploration properties and expertise will complement the development andfinancial strengths of Griffin and provide an attractive growth outlook forYukon Zinc and Griffin shareholders. We believe that this transaction representsan excellent value proposition for our shareholders and provides a brightfuture." Further information Mladen Ninkov - Chairman Telephone: +44(0)20 7629 7772Roger Goodwin - Finance DirectorGriffin Mining Limited Adrian Hadden Telephone: +44(0)20 7523 8353Collins Stewart Europe Limited Griffin Mining Limited's shares are quoted on the Alternative Investment Market(AIM) of the London Stock Exchange (symbol GFM). The Company's news releases are available on the Company's web site: www.griffinmining.com This information is provided by RNS The company news service from the London Stock Exchange