Mexican
Silver Mines Ltd. ("Mexican Silver")
(TSXV: MSM; Frankfurt WKN: A0MSLE) is pleased to announce that is has acquired
(the "Acquisition") Rio Alto Mining Limited ("Rio
Alto "), subject to TSX Venture Exchange final approval. Pursuant
to the Acquisition, Rio Alto became a wholly-owned subsidiary of Mexican
Silver and all shares and warrants of Rio Alto were exchanged for shares
and warrants of Mexican Silver on a one for one basis, with the warrants
of Mexican Silver issued in exchange for the warrants of Rio Alto having
substantially the same terms and conditions of the Rio Alto warrants.
Pursuant to the Acquisition, Mexican Silver issued a total of
35,143,411 shares, 4 million warrants and 224,000 finder's warrants to
the former holders of Rio Alto shares, warrants and finder's warrants.
In
conjunction with the Acquisition, a total of 8,537,990 Mexican Silver
shares issued to the former principals of Rio Alto are held in escrow,
one-quarter of such shares being released from escrow on each of the 12
month, 16 month, 20 month and 24 month anniversaries of the closing date.
The
expiry date of the 930,000 options held by the departing directors and
officers of Mexican Silver has been extended to May 7, 2012 subject to
TSX Venture and, if applicable, shareholder approval.
The
Acquisition is subject to TSX Venture Exchange final approval. Conditional
acceptance of the Acquisition was received from the TSX Venture Exchange
on March 18, 2009.
After
giving effect to the Acquisition, Mexican Silver has 75,550,424 shares
issued and outstanding.
Please
refer to Mexican Silver's news releases of March 10, 2009, April 6, 2009
and June 18, 2009 for additional information regarding the Acquisition
and Rio Alto.
Option
and Earn-In Right Purchase Agreement
Mexican
Silver is also pleased to announce that prior to the completion of the
Acquisition, Rio Alto acquired an option (the "Option")
to purchase all of the shares of La Arena S.A. in consideration of cash
payments of US$47.55 million (subject to adjustment) and the right (the
"Earn-in Right") to acquire up to 38.7% of the shares of
La Arena S.A. by incurring expenditures of up to US$30 million on the La
Arena gold-copper project ("La Arena Project ") in Peru,
pursuant to the Option and Earn-In Right Purchase Agreement with IAMGold Quebec Management Inc. ("IAMGold") and La Arena S.A.
The
consideration paid to IAMGold for the Option
and Earn-in Right was US$1 million, which was paid by the issue of
5,789,717 common shares of Rio Alto at the deemed price of $0.20 per
share and a 5.5% interest in Rio Alto was provided to IAMGold
represented by the issuance of 2,234,794 Rio Alto Shares. Additionally,
warrants were issued entitling IAMGold to
purchase 1.5 million Rio Alto common shares at any time before June 25,
2012, upon payment of the conversion price of $0.30. All of the Rio
Alto shares and warrants issued to IAMGold were
exchanged for Mexican Silver shares and warrants pursuant to the
Acquisition as described above.
Please
refer to Mexican Silver's news release of April 6, 2009 and June 18, 2009
for additional information regarding the Option and Earn-In Right
Purchase Agreement and the La Arena Project.
"The
option on the sale of La Arena further streamlines IAMGOLD's
core assets," stated Joseph Conway President & CEO of IAMGOLD.
"We are confident that Mexican Silver Mines will be successful
in advancing the project to production. The 10.62% ownership
interest acquired as part of the transaction allows IAMGOLD the opportunity
to participate in the future success of La Arena."
Pursuant
to the Option and Earn-in Right Agreement and subsequent Acquisition, IAMGold holds 8,024,511 Mexican Silver shares (or
9,524,511 Mexican Silver shares after the exercise of the 1.5 million
Mexican Silver warrants), representing 10.62% (or 12.43% after the
exercise of the 1.5 million Mexican Silver warrants) of the total issued
and outstanding Mexican Silver shares.
Private
Placement
Immediately
prior to the completion of the Acquisition, Rio Alto completed a private
placement (the "Private Placement") of 19,408,617 Rio Alto
shares at the price of $0.20 per share for gross proceeds of $3,881,723.
This amount includes the initial payment of US$1,000,000 to IAMGold as described above which was elected by IAMold to be provided back to Rio Alto as
subscription proceeds and Mexican Silver purchased 5,000,000 Rio Alto
shares under the Private Placement for a total subscription price of $1
million.
Finders
acting in connection with the private placement received aggregate fees
of $44,800 and 224,000 non-transferable warrants to purchase common
shares of Mexican Silver at a price of $0.20 per share, which may be
exercised for a period of twelve months following the closing date.
Board
of Directors and Executive Officers
Concurrently
with the completion of the Acquisition three current members of Mexican
Silver's Board of Directors resigned and were replaced with two nominees
of Rio Alto, namely Alex Black and Anthony Hawkshaw,
and one nominee named jointly by Mexican Silver and Rio Alto, namely Dr.
Klaus Zeitler. In addition, Mexican
Silver replaced one of the three remaining Directors with Daniel Kenney.
The new Board of Directors comprise of Feisal Somji,
Roger Norwich, Daniel Kenney, Klaus Zeitler,
Alex Black and Anthony Hawkshaw.
Anthony
Hawkshaw replaced Brian Farrell as Mexican
Silver's Chief Financial Offer and Alex Black was named as Mexican
Silver's Chief Operating Officer. Feisal Somji
continues to serve as Mexican Silver's Chief Executive Officer and
President and Raul Ramirez Morton has been
appointed as Vice President, Mexican Operations. Other senior
officers of Mexican Silver will continue with Mexican Silver in their current
capacities.
Please
refer to Mexican Silver's news release of April 6, 2009 for additional
information regarding the new directors and executive officers of Mexican
Silver.
Mexican
Silver wishes to thank each of Harry McGucken,
Joseph O'Farrell, James Glass and Brian Farrell for their dedication and
service to the Corporation.
"I
wish to take this opportunity to thank the team at Rio Alto for its hard
work, dedication and patience during the past two years in securing an
option to acquire the La Arena Project. La Arena is arguably one of the
best undeveloped gold / copper projects located in Peru and it is the
objective of Mexican Silver Mines to bring the gold oxide component of
the project into production as soon as possible," said Alex Black,
Director, COO. "We are currently in the
final stages of planning an aggressive 18 month development schedule and
have engaged Independent engineers, Coffey Mining Limited, to complete an
updated reserve estimate and 43-101 for the La Arena Oxide Project."
Feisal
Somji, President and CEO stated "Mexican
Silver took the strategy several months ago to slow down our exploration
activities, conserve our cash on hand and move into production by way of
acquisition within commodities that had long term price strength. After
looking at several opportunities we are very excited to have completed
this deal with Rio Alto. The joint company now has exposure to
silver, gold and copper, a healthy bank account, we have a management
team that has a proven track record in bringing mines into production,
assets in two stable countries, Mexico and Peru, and we are moving
towards obtaining production. In addition we are pleased to have IAMGold as a major shareholder of our company and
look forward to working with them to advance the La Arena Project in
Peru."
ON
BEHALF OF THE BOARD OF
MEXICAN SILVER MINES LTD.
___________________________________
Feisal Somji, B.Sc., MBA
President and Chief Executive Officer
FOR FURTHER INFORMATION, CONTACT:
Mexican
Silver Mines Ltd.
Feisal Somji,
President & CEO
Phone: 403.236.5089
Fax: 403.398.0693
Email: fsomji@mexicansilvermines.com
Web: www.mexicansilvermines.com
Tony Hawkshaw, Director, CFO
Phone: 1.778.995 1137
Email: tonyh@rioaltomining.com
Alex Black, Director, COO
Phone: 51.1.99279.4655
Email: alexb@rioaltomining.com
Neither TSX Venture Exchange
nor its Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts the responsibility for the
adequacy or accuracy of this release.
This press release contains
forward-looking statements and forward-looking information within the
meaning of applicable securities laws. The use of any of the words
"expect", "anticipate", "continue",
"estimate", "objective", "ongoing",
"may", "will", "project",
"should", "believe", "plans",
"intends" and similar expressions are intended to identify
forward-looking information or statements. More particularly and without
limitation, this press release contains forward looking statements and
information concerning completion of the Acquisition, the Private
Placement and the acquisition of the Option and Earn-in Right pursuant to
the Option Agreement. The forward-looking statements and information are
based on certain key expectations and assumptions made by Mexican Silver.
Although Mexican Silver believes that the expectations and assumptions on
which such forward-looking statements and information are based are
reasonable, undue reliance should not be placed on the forward looking
statements and information because Mexican Silver can give no assurance
that it will prove to be correct. Since forward-looking statements and
information address future events and conditions, by their very nature
they involve inherent risks and uncertainties. There are risks also
inherent in the nature of the Acquisition, incorrect assessment of the
value of the respective properties of each of Mexican Silver and Rio
Alto, and failure to obtain the required security holder, regulatory and
other third party approvals. Readers are cautioned that the foregoing
list of factors is not exhaustive. The forward-looking statements and
information contained in this press release are made as of the date
hereof and Mexican Silver undertakes no obligation to update publicly or
revise any forward-looking statements or information, whether as a result
of new information, future events or otherwise, unless so required by
applicable securities laws.