WITS BASIN SIGNS IRON ORE AMENDMENT WITH PRODUCTION INCENTIVE FOR ONE MILLION TONNES
Wits Basin Precious Minerals Inc. has recently amended its purchase agreement for the Ma Anshan iron ore property in the People’s Republic of China to include a production incentive to deliver one million tonnes of iron ore concentrate by December 31, 2010.
“Obtaining this tonnage incentive was critical for our lenders and our shareholders,” stated Wits Basin CEO Stephen D King. “Based on current iron ore spot prices, and assuming they remain level, we could achieve profits in 2009 and 2010 that are far in excess of our cash payments to the seller. The seller has been given a powerful incentive to achieve these goals with a potential share earn-out. Current spot prices for iron ore exceed $200 per tonne and costs are less than $100 per tonne. Payment of any shares is based on a minimum of delivery of one million tonnes. Considering the current profit opportunity, we could be paying one share to potentially earn US$2. Since these earnings per share are above our current share price, we see this transaction as potentially accretive to earnings.”
The finalization of the ore delivery guarantee is dependent upon the closing of the purchase on the mine and processing plant.
Several sources of capital, including European funding sources as well as various commercial lenders, are currently reviewing this lending opportunity. Lenders were less interested last year as a result of the now-settled lawsuit with Easyknit Enterprise Holdings Ltd. The timeline for closing is subject to lender requirements; however, the Company anticipates the closing to occur during the second quarter of 2008. This time line assumes commercially acceptable title work, permits and any other customary documentation.
About Wits Basin Precious Minerals Inc.: We are a minerals exploration and development company holding interests in three exploration projects and currently do not claim to have any mineral reserves on any project. Our common stock trades on the Over-the-Counter Bulletin Board under the symbol “WITM.” To find out more about Wits Basin Precious Minerals Inc. (OTCBB:WITM) visit our website at www.witsbasin.com.
Forward-Looking Statements and Risk Factors: The statements included in this press release concerning predictions of economic performance and management’s plans and objectives constitute forward-looking statements made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. This press release contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially. Such statements are valid only as of today, and we disclaim any obligation to update this information. These statements are subject to known and unknown risks and uncertainties that may cause actual future experience and results to differ materially from the statements made. These statements are based on our current beliefs and expectations as to such future outcomes. These risks and uncertainties include, among others, the Company’s and China Global Mining Resources’ ability to obtain or maintain regulatory approvals; the Company’s ability to obtain necessary financing; the Company’s and CGMR’s ability to complete the various mining project acquisitions in the People’s Republic of China, which are subject to execution of final documentation, completion of due diligence and receipt of necessary financing; and other risks and uncertainties described in the Company’s filings from time to time with the Securities and Exchange Commission (the “SEC”). The Company disclaims any obligation to update its forward-looking statements.
In addition, the exploration for and development of mineral deposits involves significant financial risks, which even experience and knowledge may not eliminate, regardless of the amount of careful evaluation applied to a process. While the discovery of a mineral deposit may result in substantial rewards, few properties are ultimately developed into producing mines. Moreover, we cannot make any estimates regarding probable reserves in connection with any of our projects and any estimates relating to possible reserves are subject to significant risks. Therefore, no assurance can be given that any size of reserves or grades of reserves will be realized. If a discovery is made, the mineral deposit discovered, assuming recoverable, may differ from the reserves already discovered and recovered by others in the same region of the planned areas of exploration. Further, the cost of exploration and exploitation can be extensive and there is no assurance that we will have the resources necessary or the financing available to pursue projects we currently hold interests in or to acquire interests in other mineral exploration projects that may become available. The risks we face are numerous and detailed information regarding these risks may be found in filings made by us with the Securities and Exchange Commission, including our most recent annual report.
Contact:
Wits Basin Precious Minerals Inc. H. Vance White, Chairman, 866-214-9486 Stephen King, CEO, 612-490-3419 or Lighthouse Communications 866-739-0390
info@lhcom.bz
