Sherwood Sets Shareholder Meeting Date for Capstone Combination
Sherwood Copper Corporation announced that it has set November 14, 2008 as the date for a special meeting of its shareholders to vote in respect of the business combination with Capstone Mining Corp., details of which were announced on September 8, 2008. Since the date of the announcement, Sherwood’s management has had discussions with the majority of its shareholders, who have indicated that they intend to support the transaction at the special meeting. Indications are expressions of intent and do not represent firm commitments and no lock up agreements have been entered into.
Transaction Rationale
Sherwood and Capstone also reiterated the benefits of the business combination by noting the following combined company attributes:
– Two high grade, low cost mining operations in pro mining jurisdictions – Sherwood’s Minto copper-gold mine and Capstone’s Cozamin copper-silver mine; – Pro forma combined production of 37 million pounds of copper in concentrates at total cash costs of US$0.97 per pound in the first half of 2008 with higher production anticipated in the second half as both operations complete their ramp up to their expanded capacity; – Pro forma cash flow from operations of US$75.7 million in the first half of 2008; – Forecast production of 85 million pounds of copper in concentrates in 2008, increasing to 110 million pounds in 2009, with significant by-products of gold, silver, lead and zinc; – Forecast total cash costs of under US$1.00 per pound of payable copper in 2008 and 2009, including all off-site costs and net of by-product credits; – Continued focus on organic growth through exploration at existing mines, where resources have increased substantially over the past three years even before incorporating the results of major exploration programs carried out at both mines in 2008; – Well funded pro forma combined entity, with exceptional cash flow generating capacity, that is well positioned to fund (a) continued growth at existing high grade Minto and Cozamin mines, (b) the advancement of the high grade Kutcho copper project towards a production decision, and (c) accretive merger and acquisition opportunities; – Significant downside protection through the combined forward sales positions that extend into 2011 and beyond, yet with significant upside leverage to metal prices since more than half of the production will be delivered at spot prices during that period, before accounting for proposed production expansions (which would increase exposure to spot prices); – A combined management team with complementary experience and a proven track record of building and profitably operating mines to create shareholder wealth, supported by a seasoned and experienced board of directors;
– Enhanced market exposure for Sherwood’s shareholders through access to Capstone’s TSX listing and increased weighting in the TSX composite index.
Sherwood and Capstone believe that their shareholders will benefit from the tax-effective combination of the two companies and the creation of a significantly enhanced business platform.
The special meeting of Sherwood’s shareholders will be held in the offices of Sherwood’s counsel, Dumoulin Black, on the 10th floor of 595 Howe Street, Vancouver BC at 10:00 AM on November 14, 2008. Additional information will be provided in the information circular to be mailed to Sherwood’s shareholders in October 2008.
Capstone is a Canadian based mining company currently operating the 100% owned Cozamin copper-silver-lead-zinc mine located in Zacatecas State, Mexico. The Cozamin Mine produced 6.7 million pounds of copper at a total cash cost of US$0.90 per pound in the three months ended June 30, 2008. Capstone has approximately 80.3 million shares outstanding and is well financed with no bank debt, and approximately US$100 million in working capital and marketable securities as of June 30, 2008, based on current share prices.
Additional information on Capstone Mining and its Cozamin Mine is available on Capstone’s website at http://www.capstonemining.com.
Sherwood Copper’s objective is the profitable production of base and precious metals from high grade, open pit mines in Canada. Sherwood’s first operating mine, the high grade Minto copper-gold mine in Yukon, Canada, was built on budget and ahead of schedule. The Minto Mine is one of the highest-grade open pit copper-gold mines in the world, and is a low cost producer. Aggressive exploration on the Minto property has yielded significant success, providing Sherwood the opportunity to ‘grow from within’ by expanding the resource and reserve base, potentially leading to further production increases. To further accelerate its production growth, Sherwood intends to pursue merger & acquisition opportunities that fit its business model and, in May 2008, Sherwood acquired 100% ownership in Western Keltic Mines (now Kutcho Copper Corp.), owner of the high-grade Kutcho copper-zinc-gold-silver deposit in northwestern British Columbia. Sherwood expects to lever off its successful development of the Minto Mine and rapidly advance the Kutcho project to a production decision. Sherwood has also agreed to combine with Capstone Mining, subject to requisite shareholder and regulatory approvals, creating a new low cost, growth oriented copper producer with two high grade mines and a strong balance sheet.
Additional information on Sherwood and its Minto Mine can be obtained on Sherwood’s website at http://www.sherwoodcopper.com.
