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| FSC / Press Release Liberty Arranges $30,000,000 Financing with Jilin Jien Nickel Edmonton, Alberta CANADA, April 14, 2009 /FSC/ - Liberty Mines Inc. (LBE - TSX), is pleased to announce that it has arranged a CDN$30,000,000 equity financing with Jilin Jien Nickel Industry Co., Ltd. ("JJNICL") of Panshi City in China. The financing consists of a private placement of $9,430,604 for 85,732,763 common shares at 11 cents per share; and the issuance of 186,994,510 preferred shares at 11 cents per share for the balance of the financing of $20,569,396. Upon closing of the financing, JJNICL will own 51% of the common shares of Liberty which represents a change of control of the Corporation. If all of the preferred shares were converted, JJNICL would own 76.8% of the common shares of the Corporation. The additional 272,727,273 common shares issued from a full conversion would represent a 331% dilution of the currently outstanding common shares. JJNICL will work with Liberty to minimize the common share dilution resulting from the conversion of preferred shares into common shares as much as is feasible once the Corporation is in full production. The preferred shares shall: a) be redeemable by the Corporation with cash or payment to JJNICL for nickel in concentrate, at a price per share determined to be its fair value at the time of the redemption; b) have voting rights on an as-converted basis to common shares; c) be convertible by JJNICL into common shares at any time without expiry at no additional cost and at a 1:1 conversion ratio. The conversion ratio is to be maintained pursuant to customary anti-dilution adjustments such as a common share reorganization due to a consolidation or split of the common shares; a rights offering of common shares; or a capital reorganization through a merger or amalgamation with another company; and d) pay an 8% cumulative annual dividend to JJNICL. As part of this financing, JJNICL will directly pay the negotiated balance due on the loan described in the February 19th press release. The balance of the financing will be funded to Liberty to pay amounts owing to employees, trades and suppliers; and to provide additional working capital. The financing is subject to certain governmental or regulatory approvals that are required such as those from the Chinese government and the Toronto Stock Exchange ("TSX"). No insiders are participating in the transaction. As the transaction represents a change in control of the Corporation and a dilution of more than 25% of the outstanding common shares, shareholder approval is required. As announced on February 19, 2009, Liberty currently does not have sufficient funds to meet its near term financial obligations. Furthermore, the Corporation was cease traded for failing to file its financial statements by March 31, 2009 as a result of not being able to pay its audit fees. As a result of the foregoing, the Company has applied to the TSX under the provisions of Section 604(e) of the TSX Company Manual for an exemption from its requirement for shareholder approval on the basis that the company is in financial difficulty. The TSX has advised the Corporation that, as a result of this application and in accordance with standard TSX procedures, it will review the eligibility of the Corporation for continued listing on the TSX. Liberty will also apply to the Alberta Securities Commission for a partial revocation of the cease trade order to enable the securities part of the transaction to be completed. The Corporation is confident that upon completion of the financing described above, it will be in compliance with TSX's ongoing listing requirements. A Special Committee of independent directors of the Corporation was established to review all financing opportunities and appointed an investment advisor as described in the November 11, 2008 press release. Fourteen companies were contacted by the investment advisor to try to obtain expressions of interest for a financing, merger, sale or other business combination. Management worked since July 2008 to try to arrange a financing through many financial firms throughout North America and Europe. This was the only financing package obtained that resolved the loan payout and payables owing described above; and which resolved the prepayment for nickel in concentrate owing to JJNICL. The Special Committee determined that the financing is reasonable under the circumstances and is designed to improve the Corporation's financial situation. Gary Nash, President and CEO of Liberty, commented: "Although this financing is dilutive to existing shareholders, we are fortunate to be able to complete a sizeable financing during the current base metal commodity price crisis. Having JJNICL as a major shareholder and a strategic partner will be an exciting development for Liberty which will firmly put it on the path to become a mid-tier producer of nickel. It is also encouraging to note that, despite the current downturn in the commodity markets, our Chinese partners have a long term interest in nickel and cobalt resources." As JJNICL will own 51% the common shares of the Corporation, the new board of directors will consist of four nominees from JJNICL and three from Liberty. The fourth director appointed by JJNICL must be independent for the purposes of Canadian securities laws to fairly represent the rights of the minority shareholders. About Liberty Mines Inc. Liberty Mines Inc. is a producer of nickel and is focused on the exploration, development and production of nickel, copper, cobalt and platinum group metals from its properties in Ontario, Canada. It owns and operates the Redstone nickel concentrator near Timmins Ontario. About Jilin Jien Nickel Industry Co., Ltd. Headquartered at the foot of beautiful Jilin Changbai Mountain and beside Songhua Riverside, Jilin Jien Nickel Industry Co., Ltd. was founded from the advantageous assets of the former Jilin Nickel Industry Group (the current Jilin HOROC Nonferrous Metal Group Co., Ltd.). Bolstered by continuous capital restructuring, industrial and product structure adjusting, high-tech investment, and intensified international cooperation and industrial integration, the company now has developed into a large-scaled nonferrous metals enterprise integrated with mining, concentrating, smelting and chemical production. With total assets of RMB3.2 billion Yuan and nearly 10,000 employees, the company's headquarters occupies an area of 4.5 million square meters. In September 2003, Jilin Jien Nickel Industry Co., Ltd. was listed in the A-share market of the Shanghai Stock Exchange with stock code of 600432 being the first listed company in China's nickel industry. The "Jien" brand is known as "the first brand" in nickel stocks. CAUTIONARY STATEMENT No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. This News Release includes certain "forward looking statements". All statements other than statements of historical fact included in this release, without limitation, statements regarding future plans and objectives of Liberty, are forward looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from Liberty's expectations are: exploration risks; commodity prices; regulatory approvals; receipt of mining permits and leases; and assumed startup and operating costs detailed herein and from time to time in the filings made by Liberty with securities regulators. For further information please contact: Dr. Gary Nash, PhD (Physics), President & CEO Phone (416) 238-9736 Fax 780-437-7898 e-mail: gnash@libertymines.com Source: Liberty Mines Inc. (TSX: LBE) http:// www.libertymines.com |
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