-- Posted Thursday, 8 October 2009 | Digg This Article
| | Source: GoldSeek.com
VANCOUVER, BRITISH COLUMBIA--(Marketwire - 10/08/09) - Timmins Gold Corp. ("Timmins Gold") (TSX-V:TMM - News) is pleased to announce that Sprott Asset Management LP, for and on behalf of certain of the Sprott funds, has agreed to provide USD$15 million senior secured financing to fund the development of Timmins Gold's wholly-owned San Francisco gold project in Sonora, Mexico ("San Francisco" or the "Project"). The financing will consist of the purchase of US$15 million in Senior Secured Notes (the "Notes"). In addition to the Notes the Noteholders will be granted an aggregate of 3 million share purchase warrants exercisable for a period of 24 months at a strike price of CDN$0.80 per share. The proceeds from the Notes will provide the funding required to advance San Francisco through production. The financing replaces, and comes after credit approval was received for, the project debt facility previously announced by Timmins Gold.
This financing provides Timmins Gold with financial and operational flexibility to advance the Project without resort to hedging and other restrictions on operations. The financing is expected to close on or before October 30, 2009, subject to definitive documentation. The Notes shall be repaid in 12 equal monthly installments commencing on the seventh month after the advance of funds. Each payment shall be equal to the value at the time of payment of 1,667 ounces of gold (20,004 ounces total). Timmins Gold has guaranteed a minimum rate of return of 15% per annum. A finder's fee of 2% of the proceeds is payable to an arm's length party.
The variance in financing amount from the US$22 million previously announced by the Company is accounted for by the reduced up front fees, the elimination of any debt reserve accounts, and that the short term debt of the Company will be repaid as originally scheduled by March of 2010 and not from the financing proceeds.
At the San Francisco Project, the ramp up to full production has begun and the brand new USD$12 million secondary and tertiary crushing system has been tested at loads in excess of the planned processing capacity of 550 metric tonnes per hour. During testing the crushing system was successfully operated at loads in excess of 750 metric tonnes per hour. The increased capacity, if utilized, would result in an increase of capacity from 11,000 metric tonnes per day to 15,000 metric tonnes per day to produce close to 100,000 ounces of gold per year without any additional equipment. The first 8 hectares of heap leach pads have been constructed and a further 7 hectares are almost complete. Crushed ore totaling approximately 70,000 metric tonnes has been placed on the heap leach pads as part of the initial load.
About Timmins Gold - Timmins Gold is a near term gold producer in Mexico. With construction at the San Francisco gold mine complete, Timmins Gold plans to pour gold by January of 2010. In addition to the San Francisco gold mine and its 42,000 hectare land package, Timmins Gold has over 30,000 hectares of prospective claims in the immediate area. Timmins Gold has assembled other properties in Mexico including the Cocula project which Timmins Gold has identified as a potential open pit heap leach operation, the 45,000 hectare TIM claims in Zacatecas which are adjacent to Goldcorp's Penasquito deposit, and the Tequila gold project in Jalisco which returned an intercept of 5.88 g/t gold across 24.3 meters from Timmins Gold's 2008 diamond drill program.
Timmins Gold's goal is to utilize future cash flow to expand reserves at the San Francisco gold mine, advance its exploration projects and make strategic acquisitions.
This News Release contains forward-looking statements. Forward-looking statements are statements which relate to future events. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", believes", "estimates", "predicts", "potential", or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, level of activity, performance or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements.
While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggestions herein. Except as required by applicable law, Timmins Gold does not intend to update any forward-looking statements to conform these statements to actual results.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
Contact:
Timmins Gold Corp.
Bruce Bragagnolo, LLB.
Chief Executive Officer
(604) 638-8980
bruce@timminsgold.com
timminsgold.com
-- Posted Thursday, 8 October 2009 | Digg This Article | Source: GoldSeek.com
