News Release-Well, thanks for posting, just finished reviewing this press release, it is very positive, IMO. Will have to review and reaccess, the only negative is the Canaccord financing of the San Andres deal, but this appears a great deal for $22.5M which includes the extinguishment of $5.5M debt. Completion of transaction scheduled for Nov 30 and subject to financing which is apparently being arranged by our good friends at Canaccord...
More later...
_____________________________
RNC to Acquire the San Andres Gold Mine
16:21 EDT Wednesday, September 07, 2005
TORONTO, ONTARIO--(CCNMatthews - Sept. 7, 2005) -
Not for release in the United States
RNC Gold Inc. (TSX:RNC) today announced the following developments:
i) Signed a letter of intent to acquire the producing San Andres gold mine;
ii) Successfully converted to contract mining at the La Libertad mine; and
iii) Peter Marrone has joined the Board of Directors
These developments are designed to reposition RNC as a significant gold producer in Latin America with operations in three countries and strengthen the corporate presence of the company.
"The planned acquisition of San Andres provides RNC with a mine that has a proven track record of production. San Andres will strengthen RNC's production base and position the Company for further growth," said Randy Martin, Chairman and CEO. "I am also pleased to announce that the preliminary results from the use of a contract miner at La Libertad are in line with our expectations and am delighted to welcome Peter Marrone to our Board of Directors".
In agreeing to join the board of directors of RNC, Peter Marrone stated the following: "RNC represents an excellent investment opportunity as it has begun to demonstrate that it can acquire new operations that show strong cash flow and improve existing operations. With a production profile that will immediately be at a level of 170,000 ounces per year once these acquisitions and transactions are completed increasing to 220,000 ounces per year, this is an undervalued company that should show strong returns to shareholders. In addition, there appears to be exceptional exploration potential that to date has not been a focus and will provide future growth."
All monetary amounts in this press release are in United States dollars.
The Repositioned RNC:
With these events, RNC will have the following profile:
i) Annual production of 170,000 ounces of gold from three mines;
ii) Production growing to 220,000 ounces of gold with the construction of Cerro Quema;
iii) Measured and Indicated resources (including proven and probable reserves) of 2.8 million ounces; and
iv) Exploration potential on a land position of more than 265,000 hectares around the existing mines.
Planned Acquisition of San Andres Mine:
Highlights of the planned San Andres acquisition include:
i) Purchase price of 100% of San Andres is approximately $22.5 million;
ii) Reliable asset that has more than five years of production history under management by RNC's principals;
iii) The San Andres production plan indicates increasing grades at a reduced strip ratio;
iv) The mine is in operation with all equipment in place requiring minimal future sustaining capital;
v) San Andres will continue to utilize the contract miner who has successfully operated at the mine over its mine life;
vi) Future five year mine plan has a significant potential to be extended; and
vii) Projected cash operating costs are estimated to be $262 per ounce.
A private Belize company, which owns 75% of the mine equity, has signed a letter of intent to sell its shares for $12.0 million plus a net smelter royalty ("NSR"). The NSR will be calculated as 1% on the first $20.0 million of annual revenues reducing to 0.5% on the remaining annual revenues. The cumulative maximum NSR will be $1.5 million. It was also agreed that the existing mine debts to a local Honduran bank of approximately $5.5 million would be extinguished. A company controlled by senior executives of RNC will sell the remaining 25% equity interest in the mine on the same basis, although these executives are willing to take stock rather than cash. The total acquisition cost has been estimated to be approximately $22.5 million.
The completion of the transaction is scheduled for November 30, 2005 but in no case later than December 20, 2005 and is subject to completion of final documentation, legal due diligence, regulatory approval and financing.
Should RNC be unable to arrange financing, on reasonable terms, the Company has agreed to pay a break-up fee of $0.5 million to the majority owners of San Andres.
Canaccord Capital Corporation is acting as financial advisor to RNC.
San Andres is an open pit, heap leach gold mine located close to the city of Santa Rosa de Copan, Honduras. Senior executives of RNC restarted the mine in August 2000 on behalf of the owners and have been responsible for operating the mine since restart. Over the past five and one half years, 16.5 million tonnes of ore have been placed on the leach pad at an average grade of 0.95 grams per tonne. Since restart, 402,750 ounces of gold have been extracted at an average recovery rate of 80% and an average operating cost of US$237 per ounce.
The historical production statistics are as follows:
----------------------------------------------------------------
Year Tonnes Tonnes Strip Grade Ounces Cash Cash
Ore Waste ratio (g/t) Sold Operating Operating
Crushed (000)s Costs Costs per
(000)s (000)s Ounce
----------------------------------------------------------------
2000 720 588 0.82 1.85 17,508 3,338 191
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2001 2,289 1,698 0.74 1.75 105,775 16,035 152
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2002 3,378 3,617 1.07 1.09 99,064 18,364 185
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2003 2,892 4,642 1.61 0.63 52,188 16,952 325
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2004 3,793 2,609 0.69 0.69 65,215 20,722 318
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2005-est 3,477 3,627 1.04 0.70 63,000 19,900 316
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16,549 16,781 1.01 0.95 402,750 95,311 237
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The current mine plan envisions a further 16.8 million tonnes to be mined at an average grade of 0.89 grams per tonne with the strip ratio falling to 0.53 tonnes of waste per tonne of ore. Contract mining is employed at San Andres. Future operating costs are estimated to be $262 per ounce of gold.
The projected production statistics are as follows:
----------------------------------------------------------------
Year Tonnes Tonnes Strip Grade Ounces Cash Cash
Ore Waste ratio (g/t) to be Operating Operating
Crushed (000)s Sold Costs Costs per
(000)s (000)s Ounce
----------------------------------------------------------------
2006 3,380 2,820 0.83 1.22 93,500 20,000 214
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2007 3,380 1,495 0.44 0.86 70,100 18,500 264
----------------------------------------------------------------
2008 3,390 546 0.16 0.82 67,000 17,200 257
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2009 3,380 1,305 0.39 0.77 62,750 18,100 288
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2010 3,194 2,710 0.85 0.80 61,600 19,600 318
----------------------------------------------------------------
2011 77 33 0.42 0.82 6,500 1,400 215
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16,801 8,909 0.53 0.89 361,450 94,800 262
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The information in this press release relating to San Andres is based on studies, reports and estimates which are, in RNC's opinion, relevant, reliable and the most recent available. However, these studies do not conform to current National Instrument 43 101 standards. A technical report in compliance with National Instrument 43 - 101 standards is currently being prepared and is scheduled to be completed in the near future.
San Andres has been in continuous operation since August 2000. No additional construction capital is necessary. Sustaining capital, principally for heap leach pad expansions, is estimated to be approximately US$5.5 million over the projected five and one half year mine life.
Exploration potential at San Andres is considered excellent. Mining operations are currently in the East Ledge pit with the move to the Twin Hills pit to occur at the end of 2006. The area between these two pits is currently being drilled with the expectation that additional ore can be added to the resource base. Additionally, the Cerro Cortes area which is adjacent to the existing mining area is targeted for an exploration program in the near future. There are also exploration targets close to the Twin Hills pit. San Andres recently purchased a RC drill to be dedicated to exploration drilling resulting in significantly reduced exploration costs. Future plans envision annual exploration programs of approximately 7,500 meters of drilling per year at an annual cost of approximately US$0.5 million per year.
La Libertad Contract Mining:
RNC has taken steps to improve operations at its existing La Libertad mine. The Company has elected to convert mining operations to a contractor as a cost efficient way to improve operations and to achieve production targets. The contractor selected by RNC is one of the largest and most experienced earth moving contractors in Central America.
The contract miner mobilized its equipment on August 13, 2005. By month's end, the contractor was moving, on average, 25,000 tonnes of ore, waste and spent ore per day which approximates the production target of 27,0000 tonnes of material per day. During the first two weeks of the ramp up to 5,000 tonnes of ore per day, the contractor moved approximately 2,400 tonnes per day and by month's end approximately 3,500 tonnes of ore per day were being delivered to the leach pads.
Recovery of gold from the leach pads is performing as expected with ultimate recoveries to be determined following the 90 day leach cycle. The grade of ore to the leach pads since August 13 has averaged approximately 2.0 grams per tonne.
Exploration:
The Company will control approximately 265,000 hectares of land around its four mine sites with the acquisition of San Andres. This is a highly prospective exploration package and RNC plans to pursue an extensive exploration program on these properties.
In addition to the San Andres exploration program, RNC plans to expand reserves and resources adjacent to the existing mines.
Additionally, the exploration programs will aggressively search for new mines within its land package with targets already identified in the La Libertad concessions at Santo Domingo as well as on the Hemco concessions.
Background of Peter Marrone:
After joining Yamana in July 2003 as President and Chief Executive Officer, Mr. Marrone has been instrumental in reorganizing the Company into a significant gold producer. Mr. Marrone has more than 20 years of business and capital market experience and has been on the boards of a number of public companies.
Mr. Marrone has been instrumental in building Yamana from a market capitalization of approximately $90 million when Yamana was formed in 2003 to approximately $650 million today. The Board of Directors expects RNC to benefit from Mr. Marrone's significant experience in building gold mining companies both as an operator and as a financial advisor.
About RNC Gold Inc.:
RNC Gold Inc. is a gold mining company focused on mines and projects in the Caribbean basin. From its current annual production base of 100,000 ounces of gold, RNC is positioned for growth through the acquisition of San Andres, construction of Cerro Quema, operational efficiencies and through exploration on property surrounding its present mines.The Company's main assets include the La Libertad and Bonanza mines in Nicaragua, and the Cerro Quema project under construction in Panama. The Company has signed a letter of intent to acquire the San Andres mine in Honduras. The Company has 40,569,021 common shares outstanding and on a fully diluted basis there are 64,047,736 securities outstanding.
Certain statements included herein, include those that express management's expectations or estimates of future performance, constitute "forward looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. Forward looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic, regulatory, competitive and geological uncertainties and contingencies. Such forward-looking statements involve known and unknown risks, uncertainties and other risk factors that may cause the actual financial results, performance, or achievements of RNC Gold to be materially different from estimated future results, performance, or achievements expressed or implied by those forward looking statements. These are discussed in greater detail in RNC Gold's Annual Information Form and other reports filed with Canadian provincial securities commissions at www.sedar.com. RNC Gold expressly disclaims any intention or obligation to update or revise any forward- looking statement whether as a result of new information, events or otherwise.
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