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Message: Liberty Provides Additional Details of Financial Transaction
Edmonton, Alberta CANADA, April 24, 2009 /FSC/ - Liberty Mines Inc. (LBE - TSX), ("Liberty or the Corporation") wishes to advise that further to its press release dated April 14, 2009, wherein it announced that it has arranged a CDN$30 million equity financing with Jilin Jien Nickel Industry Co., Ltd. ("JJNICL") of China, that the Company has also agreed to convert the existing debt in the Corporation held by JJNICL into a convertible loan. As described in a press release dated May 8, 2008, JJNICL had previously advanced US$15 million to the Corporation as a prepayment for nickel in concentrate to be delivered to JJNICL. This advance bears interest at the rate of 9.71% per annum. The loan will be due two years following the closing of the private placement and can be repaid in either cash or the delivery of nickel in concentrate. However, any amount of the loan outstanding on the due date may be settled, at the option of JJNICL, in consideration for the issuance of common shares priced at $0.11 per share. The outstanding balance of the loan on April 30, 2009 will be approximately US$15,826,534 million, including interest. In the unlikely event that no payments are made on the loan in the next two years, the maximum liability would be approximately US$18,315,360 million which, at a current exchange rate, represents CDN$22,508,738. If this entire amount was converted at $0.11 per share, the maximum number of shares issuable would be 204,624,895 shares. In the unlikely event that no payments are made on the loan in the next two years, the maximum liability would be approximately US$18,315,360 million which, at a current exchange rate, represents CDN$22,508,738. If this entire amount was converted at $0.11 per share, the maximum number of shares issuable would be 204,624,895 shares. If all of the preferred shares were converted, JJNICL would own 76.8% of the common shares of the Corporation. In addition, if the maximum number of shares issuable on the conversion of the loan were issued, JJNICL would own 87.2%. The additional 477,352,168 common shares issued from a full conversion and loan conversion would represent a 580% dilution of the currently outstanding common shares.
However, the Company fully expects that the loan will be significantly reduced if not repaid entirely prior to its due date and that the additional 204.6, million shares will not be issued. The maximum dilution of the currently outstanding common shares would then be 331%. As previously disclosed, there is no insider component to this transaction. Upon closing of the transaction, JJNICL will own 51% of the common shares of Liberty which represents a change of control of the Corporation.
The redemption value of the preferred shares also needs to be restated. The preferred shares are redeemable by the Corporation at any time at a price equal to $0.11 per share plus accrued and unpaid dividends; payable in cash or nickel in concentrate.
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 for this transaction 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.
After closing the transaction, Liberty will focus on completing the development of the ramp to the lower level of the McWatters nickel mine as soon as is feasible. During the approximate 3 months required to complete that development, the third ball mill at the Redstone nickel concentrator is planned to be commissioned which will enable up to 1800 tonnes per day of mineralization to be concentrated.
In the September 30, 2008 MD&A, the recovery of nickel by flotation at the Redstone concentrator of the McWatters upper disseminated mineralization was reported from the initial bulk sampling program. During October 2008, the floatation characteristics of the McWatters disseminated mineralization were confirmed. Results from the Redstone concentrator indicated an 82% recovery from a total bulk sample of 15,361 tonnes grading 0.51% nickel. The recovery was actually skewed downward as a result of some talcy development material being mistakenly mixed with the bulk sample. Generally, disseminated material containing 0.5% to 0.6% nickel was floated with an outstanding 87.1% to 88% recovery from the heazlewoodite mineralization unique to the McWatters deposit. Tests were done with material grading 0.4% nickel and yielded a 78%-82% recovery.
The 43-101 technical report dated December 16, 2008 for the McWatters deposit shows the existence of an indicated resource of 1,703,289 tonnes grading 0.49% nickel. Upon completion of the financing, a study will be underway to develop a plan to mine up to an additional 1,000,000 tonnes of mineralization at McWatters. A preliminary estimate and updated reserve calculation for the McWatters mine will be completed as soon as possible to investigate that scenario.
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
Maximum News Dissemination by Filing Services Canada Inc. *
www.usetdas.com
However, the Company fully expects that the loan will be significantly reduced if not repaid entirely prior to its due date and that the additional 204.6, million shares will not be issued. The maximum dilution of the currently outstanding common shares would then be 331%. As previously disclosed, there is no insider component to this transaction. Upon closing of the transaction, JJNICL will own 51% of the common shares of Liberty which represents a change of control of the Corporation.
The redemption value of the preferred shares also needs to be restated. The preferred shares are redeemable by the Corporation at any time at a price equal to $0.11 per share plus accrued and unpaid dividends; payable in cash or nickel in concentrate.
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 for this transaction 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.
After closing the transaction, Liberty will focus on completing the development of the ramp to the lower level of the McWatters nickel mine as soon as is feasible. During the approximate 3 months required to complete that development, the third ball mill at the Redstone nickel concentrator is planned to be commissioned which will enable up to 1800 tonnes per day of mineralization to be concentrated.
In the September 30, 2008 MD&A, the recovery of nickel by flotation at the Redstone concentrator of the McWatters upper disseminated mineralization was reported from the initial bulk sampling program. During October 2008, the floatation characteristics of the McWatters disseminated mineralization were confirmed. Results from the Redstone concentrator indicated an 82% recovery from a total bulk sample of 15,361 tonnes grading 0.51% nickel. The recovery was actually skewed downward as a result of some talcy development material being mistakenly mixed with the bulk sample. Generally, disseminated material containing 0.5% to 0.6% nickel was floated with an outstanding 87.1% to 88% recovery from the heazlewoodite mineralization unique to the McWatters deposit. Tests were done with material grading 0.4% nickel and yielded a 78%-82% recovery.
The 43-101 technical report dated December 16, 2008 for the McWatters deposit shows the existence of an indicated resource of 1,703,289 tonnes grading 0.49% nickel. Upon completion of the financing, a study will be underway to develop a plan to mine up to an additional 1,000,000 tonnes of mineralization at McWatters. A preliminary estimate and updated reserve calculation for the McWatters mine will be completed as soon as possible to investigate that scenario.
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
Maximum News Dissemination by Filing Services Canada Inc. *
www.usetdas.com
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