FSC / Press Release
Liberty Announces Closing of Restructuring Transactions
Toronto, Ontario, July 04, 2011 /FSC/ - Liberty Mines Inc. (LBE - TSX), ("Liberty or the "Company") wishes to announce today that further to its press release dated January 10, 2011, the Company and Jilin Jien Nickel Industry Co. Ltd. ("JJNICL"), the Corporation's majority shareholder, have received all the required approval and have signed all the Implementation Documents (defined below) relating to Memorandum of Understanding (the "MOU") for JJNICL to provide support for the Corporation's 2011 business plan and to undertake a comprehensive financial re-engineering of the Corporation's obligations to create a better capital structure and to substantially reduce dilution risk to minority shareholders (the "Restructuring Transactions").
To implement the MOU, the Corporation has signed two loan agreements with JJNICL and its wholly-owned subsidiary, Jien International Investments Ltd. ("JIIL"), and other documents necessary to grant security in all of the assets of the Corporation. The Corporation has also filed articles of amendment to revise its preferred shares to remove the conversion feature following the conversion of 38,098,908 preferred shares into common shares on a one for one basis (the "Implementation Documents"). The following is a summary of the elements of the re-engineering:
1. $28,914,849.06 in previous operating advances (including accrued and unpaid interest) were converted into a new credit facility (the "JIIL Facility") which bears interest at the rate of 10% per annum calculated monthly and is repayable on December 30, 2012. Additional advances of up to a maximum of $20,000,000 will also be available. Interest will accrue over the term of the facility and will be payable on the due date.
2. US$19,348,828.31 was converted into a new credit facility (the "JJNICL Facility") which bears interest at the rate of 10% per annum calculated monthly and is repayable on June 30, 2014. Interest accruing in the first eighteen months will be added to the principal but interest accruing in the second eighteen months will be payable monthly.
3. JJNICL converted 38,098,908 Preferred Shares into common shares. This has resulted in JJNICL owning 60% of the outstanding Common Shares of the Corporation. The terms of the 148,895,601 Preferred Shares that remained outstanding have been amended so that they will no longer be convertible and no further dilution will result. However, JJNICL will be given the right to require the Company to redeem the remaining Preferred Shares at a price of $0.11 per share plus accrued and unpaid dividends payable either in cash or by the delivery of nickel concentrate when such redemption is in compliance with applicable law. All other terms of the Preferred Shares will remain unchanged.
4. The JJNICL Facility will include the ability to borrow up to an approximate amount of $21,756,053.39 (representing the redemption price plus accrued dividends from May of 2009 to June 30, 2013 on the remaining 148,895,601 Preferred Shares to meet the obligations to redeem Preferred Shares if required as set out in paragraph 4 hereof until June 30, 2013).
As a result of the Restructuring Transactions, the Corporation's debt obligations are more closely aligned with the time line for the development of its assets.
The Restructuring Transactions outlined above constitute related party transactions under the rules of the Toronto Stock Exchange and Multilateral Instrument 61-101 and as a result shareholder approval by a majority of the disinterested shareholders of the Corporation was obtained at the Company's annual and general meeting held on June 28, 2011.
About Liberty Mines Inc.
Liberty Mines Inc. is a producer of nickel and is focused on the exploration, development and production of nickel, copper, cobalt and platinum group metals from its properties in Ontario, Canada. It owns and operates the Redstone nickel concentrator near Timmins Ontario.
About Jilin Jien Nickel Industry Co., Ltd.
JJNICL is one of the largest holding subsidiaries of Jilin Horoc Nonferrous Metal Group Co., Ltd., which was founded in 1960. Horoc and JJNICL own four nickel mines, one molybdenum mine, one silver mine, two smelters, seven refineries, and two chemical plants with total assets over RMB 3.0 billion. The company professionally provides all kinds of nickel, copper, cobalt salts and nonferrous metal products for plating, chemical plating, battery materials and metallurgy. JJNICL is one of the biggest producers of nickel sulfate in the world, with annual output of 25,000 tons. In September 2003 JJNICL was listed on the A-share market of the Shanghai Stock Exchange with stock code 600432.
CAUTIONARY STATEMENT
No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. This News Release includes certain "forward looking statements". All statements other than statements of historical fact included in this release, without limitation, statements regarding future plans and objectives of Liberty, are forward looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from Liberty's expectations are: exploration risks; commodity prices; regulatory approvals; receipt of mining permits and leases; equipment failures and shortage of supplies; and assumed startup and operating costs detailed herein and from time to time in the filings made by Liberty with securities regulators. Forward-looking statements speak only as of the date on which they are made. The Company undertakes no obligation to publicly update any such statement or reflect new information or the occurrence of future events or circumstances, except where required by securities regulations. Accordingly, readers should not place undue reliance on forward-looking statements.
For further information please contact:
Chris Stewart, President & CEO
Phone (780) 485-2299 Fax 780-485-2253
cstewart@libertymines.com
Press Release 11-11
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