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Coro Reprices Financing to Fund Acquisition of Cerro Negro Copper Mine, Chile VANCOUVER, BRITISH COLUMBIA--(MARKET WIRE)--Sep 26, 2008 -- Coro Mining Corp. ("Coro" or the "Company") (Toronto:COP.TO - News) announces
the re-pricing of the financing terms, announced on August
22, 2008 (the "Financing"), due to the recent market conditions.
The purpose of the Financing is to fund the acquisition
by Coro of the Cerro Negro Copper Mine in Chile. Under the
terms of the Financing, the second private placement of
8,000,000 units was priced at $1.50. Under the amended terms
(the "Amended Financing"), the second private placement
will consist of 12,000,000 units priced at $1.00 per unit,
with each unit being comprised of one common share and one-half
of a transferable warrant. Each whole warrant is exercisable
at $1.50 (rather than $2.00) for a period of three years,
subject to an accelerated exercise if the Company's shares
trade at $2.25 (rather than $2.75) per share for 20 consecutive
trading days. Under the Amended Financing, this re-pricing
will not trigger the price reset clause as established in
the first private placement that closed on August 27, 2008.
After completion of the Amended Financing, Dundee Global Resource Limited Partnership (the "Partnership"), assuming no syndication occurs, will own approximately 16,293,875 common shares of Coro, and 7,000,000 Warrants, representing 31.4% of the issued and outstanding common shares of Coro (or 39.6% assuming the exercise of all of the Warrants). In addition, upon completion of the financing as contemplated, the Partnership will be entitled to appoint up to two directors to the board of directors of Coro, and will have a pre-emptive right to maintain its proportionate equity interest in Coro. Alan Stephens, President and CEO of Coro commented, "Given the current market environment, the need to be able to establish ourselves as a copper producer is paramount and the acquisition of Cerro Negro achieves this at a time of robust copper prices. The re-pricing will allow for the completion of this financing in difficult times and provides the assurance that the Company's business strategy remains intact." The Company previously obtained written shareholder consents to the terms of the Financing because the number of shares being made issuable under the transaction were more than 25% of the current issued and outstanding number of shares of the Company and under TSX policies such a holding may be considered to materially affect control of the Company. The Company is also required to seek shareholder approval for the terms of the Amended Financing. The Company again intends to seek shareholder approval of the Amended Financing by obtaining written consent as provided by Section 604 (d) of the TSX Manual. The Partnership and any affiliates which may own shares of the Company will not be entitled to vote on the transaction (which represents approximately 3,000,000 common shares of the Company or approximately 7.8% as at the date of this news release). It is management's and the board's firm belief that the financing proposed by the Partnership provides the Company with the opportunity to complete the acquisition of Cerro Negro on a timely basis and is in the best interests of the Company, and strongly recommend that shareholders vote for its approval. Once this financing has completed, it is management's intention to replace the Partnership's debt with a longer term debt facility and/or equity at a time of more favorable prices. Principal Terms of Financing: The following details the principal terms of the Financing and the Amended Financing, with the key changes being: an amendment of the price of the second private placement (from $1.50 to $1.00), the re-pricing of the warrants associated with the second private placement (from $2.00 to $1.50) and the trigger for the accelerated exercise terms (from $2.75 to 2.25), as well as an amendment to the deemed price of the shares issued in conjunction with the bonus payment on the secured loan facility (from $1.50 to $1.00). Initial Private Placement Under the Financing, an initial private placement of two million units at $1.50 per unit for gross proceeds of $3 million was completed on August 27, 2008. Each unit was comprised of one common share and one-half of a transferable warrant. Each whole warrant is exercisable to acquire one common share of Coro at a price of $2.00 until August 26, 2011. In the event that the common shares of Coro trade at an average price of $2.75 per share for 20 consecutive trading days during the term of the warrants, then provided that the Company has given written notice to the holders of the warrants, the warrants will expire 60 days after such written notice. Coro used the proceeds of the initial private placement for working capital purposes. Second Private Placement Under the Financing, the Partnership had agreed to a second private placement of eight million units for gross proceeds of $12 million on the same terms and conditions as the initial private placement. Under the revised terms, twelve million units will now be issued at $1.00 per unit, each unit being comprised of one common share and one-half of a transferable warrant. Each whole warrant is exercisable to acquire one common share of Coro at a price of $1.50 for a period of three years from the closing. In the event that the common shares of Coro trade at an average price of $2.25 per share for 20 consecutive trading days during the term of the warrants, then provided that the Company has given written notice to the holders of the warrants, the warrants will expire 60 days after such written notice. Coro will use the proceeds from the second private placement together with the proceeds from the secured Loan Facility to make the final payment to acquire Cerro Negro. Secured Loan Facility Under the Financing, the Partnership agreed to provide a US$25 million secured Loan Facility (the "Facility"). The material terms of the Facility are unchanged. It is non-revolving with an initial term of twelve months from the closing date, and Coro may request a 12 month extension to the Facility by giving the Partnership written notice 60 days prior to the maturity date. The Facility carries a 12% per annum interest rate, and may be prepaid in whole or in part before maturity without penalty or bonus. The Facility will be secured by charges over certain of the assets of the Company, including the assets of the Cerro Negro Copper Mine, and is subject to a hedging program to protect the price of copper during the life of the secured loan satisfactory to the Partnership. In consideration for the Facility, Coro has agreed to pay to the Partnership a structuring fee in the amount of $150,000 payable in cash on the closing date, and a bonus equal to 5% of the principal amount of the Facility payable by the issuance of common shares of Coro at a deemed price of $1.00 per share (previously $1.50 under the Financing terms). Pursuant to the Second Private Placement and the Secured Loan Facility, Coro will issue approximately 13,293,875 common shares to the Partnership. If Coro arranges alternative financing prior to the completion of the financing with the Partnership, Coro has agreed to pay to the Partnership a cash break fee in the aggregate amount of the bonus and structuring fee, together with the expenses incurred by the Partnership in connection with the Financing. Closing Completion of the second private placement and the Facility are subject to certain conditions, including receipt of all necessary shareholder and regulatory approvals, execution of transaction and security documents, and closing of the Cerro Negro acquisition. The Partnership may syndicate a portion of the Financing to other parties. Price Reset Clause The terms of the Financing provided that if Coro completed any future public or private offering of common shares or securities convertible to common shares during the longer of 12 months following the closing of the private placements, and the term during which the Facility is outstanding, at an issue price less than $1.50 per share (a "Discounted Offering"), Coro must pay to the initial purchasers of units (whether or not such persons still hold securities of the Company), on the closing date of any Discounted Offering, an amount that is equal to the difference between $1.50 and the issue price of the Discounted Offering, (or, in the case where there has been more than one Discounted Offering at the lowest price under such Discounted Offerings) multiplied by the number of units acquired by the initial subscribers under the private placements (the "Price Reset Payment"). The Company's obligation to pay the Price Reset Payment will be secured by the same security as for the Facility on a pari passu basis with the Facility. Under the Amended Financing, no price reset payment will be triggered as a result of the re-pricing of the second private placement, and the price reset price has been reduced to $1.00 for the determination of any price reset payments under the second private placement. For illustrative purposes only, the following example shows the calculation of the price reset clause, should the Company undertake two subsequent equity offerings, prior to the Facility being repaid or the longer of 12 months after completion, at $1.20 and $0.90 respectively:
Potential
Offering Calculation Cash Payment Shares
At first subsequent offering:
On first private placement $1.50-$1.20 x equals $0.6 500,000
2,000,000 units million shares
On second private placement (no adjustment)
At second subsequent offering:
On first private placement $1.20-$0.90 x equals $0.6 666,667
2,000,000 units million shares
On second private placement $1.00-$0.90 x equals $1.2 1,333,333
12,000,000 units million shares
Total Price Reset equals $2.4
million
Adjusted Effective Price of Offering: equals $0.90
per unitThe price reset clause provides the Partnership the assurance that should the Company complete any offering at a price less than $1.50 with respect to the first private placement or $1.00 with respect to the second private placement then the price of these private placements will be effectively adjusted to the lowest offering price over the term of the longer of 12 months or the term of the Facility. The Partnership may, at its option, in lieu of all or part of the cash settlement of the Price Reset Payment, elect instead to receive the number of common shares of the Company which is equal to all or part of the Price Reset Payment, as the case may be, divided by the discounted offering price. Any future share issuances would be subject to normal TSX approval requirements. The Partnership would not be entitled to vote on such issuances, should shareholder approval be required under the policies of the TSX. Pre-emptive Right The Company has also provided the Partnership with a pre-emptive right to maintain its equity interest in the Company, subject to disinterested shareholder approval, if required, provided that it maintains an equity interest of greater than 10% in the issued and outstanding common shares of the Company. The Company will not enter into or complete any financing which requires shareholder approval in order for the Partnership to exercise its Pre-emptive Right with respect to such financing unless it has previously obtained such approval. About Cerro Negro The Cerro Negro mine is located 37km south east of the town of Cabildo in the Province of Petorca, V Region of Chile, and approximately 210km north of Santiago. All plant and mine sites are easily accessible and are located at elevations of less than 1200m in moderate terrain. Agricultural activity in the immediate area of the property is negligible and confined to rough grazing, apart from company sponsored trial avocado production. Operations commenced in 1944, and between 1983 and 1996, Cerro Negro was owned by a predecessor company to Antofagasta Minerals, operating exclusively as a 1,200 tpd concentrator, producing 5,000 tpy copper in concentrates. In 1997, at a time of low copper prices and high costs, CMN was sold to its employees, and a small copper precipitate plant subsequently installed. This leaching operation was converted to SX in 1999 to produce copper sulphate and in 2001-02 to a 3,000tpy SXEW operation; it was further expanded in 2005 to 4,000 tpy capacity and in 2007 to its current 6,000 tpy Cu. Current copper cathode production capacity, including toll treatment, is approximately 6,000 tonnes per year, concentrator production capacity is approximately 9,600 tonnes of copper-silver concentrates per year, and copper sulphate production capacity is approximately 4,200 tonnes per year. The toll treatment of oxides is governed by an agreement with Enami which purchases third party ore trucked in from small artisanal mines in the surrounding district. The agreement extends to 2011 and Cerro Negro production plan assumes treatment of 180,000 tonnes per year of this material to recover approximately 2,000 tonnes per year cathode. CORO MINING CORP. Alan Stephens, President and CEO About Coro Mining Corp.: The Company was founded with the goal of building a mining company focused on medium-sized base metals deposits in Latin America. The Company intends to achieve this through the exploration for, and acquisition of, projects that can be developed and placed into production and it has established an experienced development and exploration team to accomplish this. Coro has two main properties; Flores, in Chile and San Jorge, in Argentina, an option to acquire the Cerro Negro copper mine in Chile, as well as other exploration properties located in Chile. This news release includes certain "forward-looking statements" under applicable Canadian securities legislation. Such forward-looking statements or information, including but not limited to those with respect to the prices of copper, estimated future production, estimated costs of future production, permitting time lines, involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. Such factors include, among others, the actual prices of copper, the factual results of current exploration, development and mining activities, changes in project parameters as plans continue to be evaluated, as well as those factors disclosed in the Company's documents filed from time to time with the securities regulators in the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador. Contact: Contacts:
Coro Mining Corp.
Michael Philpot
Executive Vice-President
(604) 682-5546
Email: investor.info@coromining.com
Website: http://www.coromining.com
Source: Coro Mining Corp.
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