Thu Feb 15, 2007 Continental And Jinchuan Sign Framework Agreement for Equity Financing, Capital Financing, Concentrate Off-Take And Other Mine Building Support
February 15, 2007, Vancouver, BC - Continental Minerals Corporation ("Continental" or the "Company") (TSX Venture: KMK; OTCBB: KMKCF) is pleased to announce that it has entered into a framework agreement (the "Agreement") with Jinchuan Group Ltd. ("Jinchuan") for equity financing, capital financing, concentrate off-take and other mine building support for Continental's Xietongmen copper project (the "Project").
Pursuant to the Agreement, Jinchuan has agreed, among other things, to purchase 10,000,000 units (the "Units") of the Company, at a price of C$1.80 per Unit, for gross proceeds to Continental of C$18,000,000. Each Unit will consist of one common share in the capital of Continental and one common share purchase warrant (a "Warrant"). Each Warrant is exercisable for 0.8 of a common share in the capital of Continental for a period of nine months from the Closing at the following prices: at C$2.25 per share for a period of six months, and at C$2.75 per share for an additional three months thereafter.
Jinchuan has also agreed to provide other key support to the Xietongmen Project, including assistance in arranging for 60% of the required capital financing for the development of a mine in the form of debt; contributing 30% of required capital financing for the Project in the form of either debt or equity; and providing other support to the Project including assistance with design engineering, training, maintenance and other technical aspects, as well as sales of mineral products. The parties have also settled the principal terms of a concentrate off-take arrangement in connection with the Project to be incorporated into the formal agreements in due course.
The financing and related transactions are subject to customary conditions, including the completion of definitive agreements, satisfactory due diligence reviews by the parties and receipt of all necessary approvals from the relevant departments of the Chinese government, the TSX Venture Exchange and other applicable regulatory authorities. The securities issued pursuant to the offering will be subject to a four month hold period in accordance with applicable Canadian securities laws.
The proceeds of the current financing shall principally be used for further exploration and development of the Xietongmen Project in China and for general corporate purposes.
Jinchuan is a leading Chinese corporation engaged in engineering, manufacturing, construction, mining, processing and smelting of nickel, copper and other metals. This strategic partnership with Jinchuan will strengthen the Continental team that is focused on the development of the Xietongmen project.
Continental is currently conducting a Feasibility Study and an Environmental/Social Impact Assessment of the Project. Successful programs in 2005 and 2006, outlined significant mineral resources at Xietongmen as well as advancing engineering and socioeconomic studies of the deposit. Measured and indicated resources of 219.8 million tonnes grading 0.43% copper, 0.61 g/t gold and 3.87 g/t silver (0.78% copper-equivalent) at a 0.15% copper cut-off were recently announced for the deposit (see Continental's January 24, 2007 news release). In addition, drilling in 2006 led to a new discovery called Newtongmen. The 2007 program, scheduled to begin in the second quarter, is designed to delineate Newtongmen and explore other prospective targets.
This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration requirements is available.
For additional details, please visit the Company's website at www.continentalminerals.com or contact Investor Services at (604) 684-6365 or within North America at 1-800-667-2114.
On behalf of the Board of Directors
Gerald Panneton President & CEO
1 The estimate was prepared by Continental staff and audited Aker Kvaerner Engineering.
Copper and gold equivalent calculations use metal prices of US$1.25/lb for copper and US$450/oz for gold. Adjustment factors to account for differences in relative metallurgical recoveries for gold and copper will depend upon completion of definitive metallurgical testing. CuEQ = Cu % + (Au g/t x 12.86/22.046)
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