VANCOUVER, BRITISH COLUMBIA, Aug. 23, 2010 (Marketwire) -- Aurcana Corporation ("Aurcana" or the "Company") (TSX VENTURE:AUN) wishes to advise it has completed a credit facility agreement between Minera La Negra S.A. ("Minera La Negra"), a subsidiary of the Company, pursuant to its Copper and Zinc purchase contracts with Trafigura Beheer B.V. ("Trafigura") and its wholly owned subsidiary Consorcio Minero de Mexico Cormin Mex S.A. de C.V. ("Cormin") collectively, the "Purchase Contracts". The Copper Purchase Contract has been extended until 2014, and the Zinc Purchase Contract is to be reviewed by the end of 2011.
The Trafigura made excess provisional payments to Minera La Negra under the terms of the Purchase Contracts and certain other facilities. In an effort to settle these outstanding amounts, Aurcana and Trafigura have successfully negotiated a reduction in the Excess Payment to US$3,400,000. As a result Minera La Negra and Trafigura have entered into a facility agreement (the "Facility Agreement") under which Trafigura has made a US$3,400,000 (the "Loan") available to Minera La Negra, to be repaid in whole or in part, by amounts due to Minera La Negra from Trafigura in payment for 100% of Minera La Negra's copper and zinc concentrates produced from the La Negra mine under the terms of the Purchase Contracts.
The Company has paid down US$1,540,000 which leaves this amount now available for general working capital purposes.
The terms of the Facility Agreement include:
-- The principal of the Loan is repayable in monthly instalments of not
less than US$80,000 plus interest equal to 5% per annum and one month
LIBOR screen rate for dollar deposits starting from July 2009 and is
repayable in full on September 28, 2012, subject to an extension of the
final repayment date by Trafigura;
-- The Loan is secured by the Company by way of a pledge of all of its
interest in the Shafter Silver mine held by the Company's direct
subsidiary Silver Assets Inc. ("Silver Assets") and the Company's
indirect subsidiary, Rio Grande Mining Company ("Rio Grande"). The
pledge has been effected by a pledge of the shares of each of Silver
Assets and Rio Grande pursuant to the terms of pledge agreements entered
into between Trafigura and each of Silver Assets and Rio Grande;
-- The Company has agreed with Trafigura to guarantee the repayment of the
Loan, such guarantee evidenced by way of a formal guarantee (the
-- The Company has issued to Trafigura an aggregate of 2,125,203 common
share purchase warrants (each a "Warrant"). Each Warrant entitles
Trafigura to purchase one common share in the capital of the Company at
an exercise price of Cdn$0.2952 per share at any time during a period of
two years from the date of issuance. In accordance with applicable
Canadian securities laws, the Canadian hold period on the Warrants that
were issued expire on December 21, 2010.
Mr. Lenic Rodriguez, President and CEO of the Company, comments:
"This credit facility obtained from Trafigura is a vote of confidence on Aurcana's Management and the operations of the La Negra mine and its expanded production. It is a clear step forward in the process now under way to clean up the Company's balance sheet."
About Aurcana Corporation:
The Shafter Silver Mine is scheduled to start up production within 18 months of securing permits and financing, producing 3.9 million ounces of silver in the first year. It has a NI 43-101 measured and indicated resource of 24.6 million ounces of silver (2,900,000 tons at 8.48 Ag opt) and an inferred resource of 22.8 million ounces of silver (2,167,000 tons at 10.52 Ag opt) using a 4.0 ounce per ton cut off. The 92% owned La Negra silver-lead-zinc-copper mine is on target to increase production to over 2 million ounces Silver Equivalent annually with the recently completed expansion to 1,500 tonnes per day. The reader should be cautioned the Company has not completed a feasibility study confirming the projected production capacity for La Negra and there is no certainty the Company's plans will be economically viable. Ron Nichols, P.Eng. a Director and Senior Vice President for Aurcana, and a Qualified Person as defined by National Instrument 43-101, supervised the preparation of the technical information in this release.
ON BEHALF OF THE BOARD OF DIRECTORS OF AURCANA CORPORATION
Lenic Rodriguez, President
Caution Regarding Forward-Looking Statements - This news release contains certain forward-looking statements, including statements regarding the business and anticipated financial performance of the Company. These statements are subject to a number of risks and uncertainties. Actual results may differ materially from results contemplated by the forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include unsuccessful exploration results, changes in metal prices, changes in the availability of funding for mineral exploration and development, unanticipated changes in key management personnel and general economic conditions. When relying on forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and should not place undue reliance on such forward-looking statements. The Company does not undertake to update any forward-looking statements, oral or written, made by itself or on its behalf.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
(604) 331-9333 or Toll Free: (866) 532-9333
(604) 633-9179 (FAX)