Highland Copper to acquire Orvana's Copperwood project

2014-02-11 08:33 ET - News Release

Mr. David Fennell of Highland reports

Highland Copper Company Inc. and Orvana Minerals Corp. have entered into a definitive agreement whereby Highland will acquire all rights, title and interest in the Copperwood project from Orvana through the acquisition of all of the outstanding shares of Orvana Resources U.S. Corp. Copperwood is located in the Upper Peninsula of the state of Michigan, approximately 30 kilometres southwest of the White Pine project.

Among other things, closing of the acquisition is conditional upon the completion of a financing to finance the acquisition and receipt of all required regulatory approvals including the approval of the TSX Venture Exchange. Closing is expected by April 30, 2014. The agreement has been approved by both companies' boards of directors.

David Fennell, executive chairman of Highland, stated: "This transaction is part of a strategy that Highland has undertaken to consolidate an emerging copper district in the Upper Peninsula of Michigan. The acquisition of Copperwood in conjunction with our previously announced acquisition of the White Pine project, and combined with our existing Keweenaw projects, establishes the foundation for an emerging intermediate copper producer. The synergistic combination of these three assets in a single portfolio will bring together a large-scale historical estimate of copper reserves and resources at White Pine and Copperwood, and additional potential copper resources from the Keweenaw projects."

Michael Winship, president and chief executive officer of Orvana, stated: "Orvana has been pleased to be part of the development of Copperwood over the last several years. We continue to believe that a good copper mine will be built here. Based on a strategic planning review in 2013, Orvana decided that a disposition would allow for greater organic growth at existing operations through concentrated exploration. In addition, Orvana's balance sheet will be strengthened in this challenging market of metal price volatility."

Summary of the transaction

As consideration for the acquisition, Highland will pay Orvana up to $25-million (U.S.) in aggregate, of which $20-million (U.S.) will be paid in cash upon closing and $5-million (U.S.) will be paid in cash or shares of Highland, at Orvana's option, upon occurrence of the events described below:

Copperwood project

Copperwood is a feasibility-stage project. On Feb. 25, 2011, Orvana announced an updated resource estimate for Copperwood, including the mineralization in the adjacent Copperwood satellites area (see the associated table). Subsequently, on Feb. 7, 2012, Orvana announced the results of a feasibility study for Copperwood.

The mineral reserves and mineral resources reported in the associated table are provided as historical data only. A qualified person has not completed the work necessary to verify the quality of the historic exploration data or to classify the historical estimate as current mineral resources or mineral reserves. Highland is not treating the historical estimate as current mineral resources or mineral reserves and the historical data should not be relied upon until they have been verified.

 COPPERWOOD PROJECT HISTORICAL ESTIMATE OF MINERAL RESERVES AND RESOURCES
                                   
                                                     Copper          Silver
                                        mst       %     mlb     g/t     moz

Proven reserves                        23.1    1.46     710    3.98    2.98
Probable reserves                       7.1    1.21     142    2.44    0.46
Total reserves                         30.2    1.41     852    3.63    3.46
Indicated resources (Copperwood                                            
satellite area)                          25     1.4     771                                
Inferred resources                                                         
(Copperwood satellite area)            36.1     1.3   1,033                                

Advisers and counsel

Highland has engaged BMO Capital Markets as its financial adviser and Rhoades McKee PC as United States legal counsel and McMillan LLP as Canadian legal counsel. Orvana has engaged Cutfield Freeman & Co. as its financial adviser and Stikeman Elliot LLP as its legal counsel.

Qualified person

The technical information contained in this news release has been approved by Carlos Bertoni, PGeo, a consultant to Highland. Mr. Bertoni is a qualified person as defined in NI 43-101.