| ||Tue Jul 8, 2008|
$3.5 Million Secured Loan Arranged Kubi Gold Project Purchase Completed
| ||THIS NEWS RELEASE IS NOT FOR DISTRIBUTION IN THE UNITED STATES OR TO U.S. NEWS AGENCIES|
News Release # 08-09
July 8, 2008, Vancouver BC - PMI Gold Corporation (TSX.V:PMV) announces that it has arranged and closed a $3.5 million secured loan. The proceeds from this loan have been applied to the final payment of US$3 million and accrued interest outstanding and payable to Nevsun Africa (Barbados) Ltd. ("Nevsun"), a wholly owned subsidiary of Nevsun Resources Ltd. of Canada, pursuant to the agreement to acquire Kubi announced on September 17, 2007.
The Kubi Gold project is now 100% owned by PMI Gold, subject only to the Ghana Government 10% free carried interest and a 3% net profits of production royalty payable to International Royalty Corporation. Golder Associates Ltd. ('Golder') in their Preliminary Assessment study published on April 10, 2008, has confirmed that Kubi can be developed as a profitable underground mining operation with a 28% pre-tax Internal Rate of Return (IRR), and a US$38.6 million Net Present Value (NPV@10% discount rate) at a gold price of US$750 per ounce. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
The secured loan, arranged with Trafalgar Capital Specialized Investment Fund, FIS, ("Trafalgar") is made up in equal parts of a Bridge Loan and a Convertible Loan, both of which bear interest at 14% per annum for the first 90 days, and the Convertible Loan, thereafter at 10% per annum, payable monthly. PMI Gold has the option to pay all or any amounts owing on the Bridge Loan on 3 days advance notice, by paying a 12.5% redemption premium. Other than this optional redemption, PMI Gold is required to redeem the Bridge Loan and accrued interest within 90 days, with a 7.5% redemption premium.
The Convertible Loan has a term of 24 months, and will be redeemed in shares monthly beginning in the 4th month, in equal instalments, and at a redemption premium of 12.5%. Trafalgar has the option, at any time, to convert in any one week period up to $50,000 of the loan into shares at the fixed conversion price of $0.28 until January 7, 2010; and at $0.308 until July 7, 2010. Following any conversion, Trafalgar may not own more than 9.99% of the Company's then outstanding shares. If the shares are trading at less than the fixed conversion price, PMI Gold has the option to pay all or any amounts owing on 3 days advance notice by paying a 12.5% redemption premium.
At closing, Trafalgar was paid a 7% cash and a 1,000,000 share commitment fee. The shares issued pursuant to the convertible debenture are subject to a 4 month hold period, expiring on November 9, 2008. A finders fee, consisting of $122,500 in cash and warrants to purchase up to 218,750 shares at a price of $0.24 expiring January 7, 2010, is payable to Rivington Street Corporate Finance.
The Company also announces that the previously announced $4 million brokered private placement with D&D Securities Company of Toronto has been terminated by mutual agreement.
The Company is continuing to work closely with its corporate finance adviser Devitor AB of Stockholm, Sweden. The Company has previously announced that Devitor has undertaken to arrange a secured bond to finance the Kubi gold deposit to a producing mine. It is the Company's intention to pay out the Bridge Loan with the proceeds from this bond issue, if as and when completed.
PMI Gold now controls four previous operating mines on 658 square kilometres of leases and concessions located along the prolific Ashanti and Asankrangwa gold belts in Ghana. Ghana is Africa's second largest gold producer and has attracted over $7 billion in foreign direct investment into the minerals and mining sector over the last decade. Ghana is a destination of choice because of its long gold mining history, prospective resource base, reasonable taxation and stable government.
On behalf of the Board,
"Douglas R. MacQuarrie"
President & CEO
For further information please contact:
Douglas R. MacQuarrie, President & CEO
Telephone: 1 (604) 682-8089 Toll-Free: 1 (888) 682-8089 Facsimile: 1 (604) 682-8094
or for European Investors: Florian Riedl-Riedenstein: Tel: 43-2774-28814, e-mail: email@example.com
or John Mullen: Tel: 41-522-428795, e-mail: John Mullen@bluewin.ch
Or visit the PMI Gold Corporation website at www.pmigoldcorp.com (in German: http://pmi.goldseiten.de)
THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
This news release contains forward-looking statements which involve known and unknown risks, delays and uncertainties not under the Company's control which may cause actual results, performance or achievements of the Company to be materially different from the results, performance or expectations implied by these forward-looking statements. We Seek Safe Harbour.
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