Vancouver, British Columbia - October 12, 2010. Abacus Mining & Exploration Corporation ("Abacus" or the "Company") (TSXV: AME) announces that the Definitive Joint Venture Agreement (the "Agreement") with KGHM Polska Miedz S.A. ("KGHM") formally creating a Joint Venture Company has been finalized and closed. The Joint Venture sets out the parameters for the development of the Afton-Ajax copper-gold project and surrounding area near Kamloops, B.C. through bankable feasibility to production.
Under the terms of the Agreement, which has been approved by the Boards of Directors of both companies, Abacus and KGHM have entered into an incorporated joint venture to conduct exploration over the 8,000 hectare property, acquire additional properties within a 5km area of interest, and engage in development, mining and operation activities in other prospective global mining regions. Each shareholder has made an initial contribution to the Joint Venture Company as follows: Abacus will contribute the property, equipment and fixtures for a 49% shareholding interest, and KGHM will contribute a cash payment in the amount of US$37 million for a 51% shareholding interest in the Joint Venture Company.
The US$37 million initial contribution by KGHM will be deployed principally to fund a Bankable Feasibility Study ("BFS") on the 503 million tonne copper-gold rich Ajax property as well as exploration work elsewhere in the Afton camp. The BFS contemplates the construction of a mine in respect of one or more of the properties.
A Board of Directors for the Joint Venture Company has been installed, comprising two nominees of each of Abacus and KGHM with general responsibility and authority for the management of the affairs of the Joint Venture Company, and to establish objectives, policies and strategies relating to the Joint Venture and its operations. Mr. Marcin Mostowy, KGHM's Risk Manager, will be appointed CEO of the Joint Venture Company, while Andrew Pooler, COO of Abacus Mining, will be appointed COO of the Joint Venture Company.
Abacus shall be the Operator of the Joint Venture until at least such time as KGHM exercises its additional interest option upon BFS.
"With the incorporation of the Joint Venture Company and its adequate funding structure, we can now look forward to leveraging our combined expertise to develop the Afton-Ajax project through to BFS and expand the resource to maximize the project's economics," remarked Jim Excell, Abacus' President and CEO. "Concurrently, we intend to immediately present and evaluate other copper-precious metals situations to the Joint Venture that merit consideration, to build the future pipeline and create new value opportunities for our shareholders."
Mr. Herbert Wirth, President of The Management Board of KGHM added: "KGHM's joint venture with Abacus has all the elements of a superior growth vehicle and an excellent fit. Abacus has an expert mining team with a demonstrated track record in the Americas and an ideally located project with encouraging economics that can now progress through to production without funding concerns. We believe this is a good start to other future expansive joint efforts."
The aforenoted Agreement follows an initial investment by KGHM of C$4.5 million into Abacus by way of private placement which closed on May 7, 2010. Upon completion of the BFS, KGHM will have the option within 90 days to acquire an additional 29% interest in the JV Company, for an aggregate 80% interest, for a total cash consideration of up to a maximum of US$35 million. Upon exercising this additional interest option, KGHM will arrange financing for its attributable share (80%) of project capital expenditures, and will offer to arrange financing for Abacus' attributable share (20%) of project capital expenditures. Abacus is not obligated to have KGHM make such arrangements on its behalf, and may obtain financing from third party sources.
On June 23, 2010, Abacus previously announced that shareholders of the Corporation overwhelmingly approved the Joint Venture transaction with KGHM Polska Miedz S.A. at a Special Meeting of Shareholders. The Agreement with KGHM accelerates and largely de-risks the Afton-Ajax project through BFS and initial production while also providing the opportunity to build additional value for both companies by leveraging their respective strengths in pursuit of other exceptional opportunities in Canada and elsewhere.
On Behalf of the Board,
ABACUS MINING AND EXPLORATION CORPORATION
James D. Excell
President and Chief Executive Officer
For further information, please contact:
Donna Yoshimatsu, Director of Investor Relations [email protected], or
Tim Mikula, Investor Relations 866_834_0301 [email protected]
Abacus is an exploration and mine development company with a 43_101 compliant positive preliminary economic assessment report (announced June 22, 2009) for its Ajax copper/gold project located 10 kms southwest of Kamloops, British Columbia. The report contemplates a 60,000 tonne per day operation producing an average of approximately 110 million pounds of copper (approx. 50,000 tonnes) and 100,000 ounces of gold in concentrate annually. Sensitivity analyses approximating metal prices (US$3.00 per pound copper and US$1,000 per ounce gold) in the assessment indicate a NPV of $1.46 billion discounted 8% over a 23 year mine life, with an IRR of 35.4%, cash costs of $0.90 per pound copper, and payback of 2.0 years. The Ajax extension remains open along strike and at depth. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This release includes certain statements that may be deemed "forward-looking statements". All statements in this release, other than statements of historical facts, that address events or developments that Abacus Mining and Exploration Corp. (the "Company") expects to occur, are forward-looking statements. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in the forward-looking statements. Factors that could cause the actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration successes, and continued availability of capital and financing, and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. Forward-looking statements are based on the beliefs, estimates and opinions of the Company's management on the date the statements are made. Except as required by applicable securities laws, the Company undertakes no obligation to update these forward-looking statements in the event that management's beliefs, estimates or opinions, or other factors, should change.
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