Gold Hawk Signs a Share Purchase Agreement With Nyrstar for the Sale of an 85 Per Cent Interest in the Coricancha Mineadmin
Gold Hawk Resources Inc. announced today that the Company has entered into a Share Purchase Agreement (the “Agreement”) with Nyrstar (“Nyrstar”) (NYSE Euronext Brussels: NYR), whereby Nyrstar will acquire an 85 per cent interest in Compania Minera San Juan (Peru) S.A. (CMSJ), Gold Hawk’s Peruvian operating subsidiary, for US$15 million. Nyrstar is a leading, well-financed, global multi-minerals business, producing significant quantities of zinc and lead as well as other products (including silver, gold and copper).
As part of the transaction, Nyrstar will also assume Gold Hawk’s guarantee in respect of CMSJ’s existing US$13 million senior debt facility, which is payable in February 2010. Nyrstar has also agreed to loan up to US$20 million to CMSJ to fund re-start and expansion costs for the Coricancha Mine.
“Gold Hawk has had discussions with numerous parties over the past year to seek a financial solution that will re-start the Coricancha Mine. This all-cash offer and financing package for CMSJ is a compelling opportunity,” said Kevin Drover, Gold Hawk President & CEO.
Following completion of the transaction, Gold Hawk will be debt-free, will have US$15 million in cash and will own a 15% interest in the Coricancha Mine, which could be in production during the first half of 2010. In addition, it is expected that the US$20 million loan that Nyrstar will provide to CMSJ will be sufficient to finance the re-start and expansion of the mine.
Nyrstar has indicated that following a ramp-up to expanded production levels by 2011, the expanded Coricancha Mine is expected to produce annually (approximately) 20,000 dry metric tonnes (dmt) of zinc concentrate, 15,000 dmt of lead concentrate, 45,000 troy ounces of gold and 2.4 million troy ounces of silver.
“Gold Hawk is currently evaluating other opportunities in the mineral resource sector to enhance shareholder value following completion of this Transaction,” said Drover. “One of the potential opportunities the Company is considering would be to utilize Gold Hawk as a platform to create the next quality mid-tier gold producer.”
The Companies previously signed a non-binding, confidential heads of agreement document (see Gold Hawk media release from August 11, 2009) prior to completion of due diligence by Nyrstar.
The transaction is expected to be completed in November 2009 and is subject to certain customary conditions, including receipt of shareholder approval and the approval of the TSX Venture Exchange. A special meeting of shareholders of Gold Hawk (the “Meeting”) will be held on or about November 9, 2009 to approve the proposed transaction. The Company has set the Record Date for shareholders entitled to receive notice of the Meeting as October 2, 2009.
The Transaction and the assignment to Nyrstar as guarantor of Gold Hawk’s current debt are also subject to the consent of Gold Hawk’s lenders under the provisions of its debt facilities.
Gold Hawk has retained Auramet Trading LLC as advisors and Fraser Milner Casgrain LLP as legal advisors in connection with the Transaction.