May 10, 2012
Vancouver, B.C. - Starcore International Mines Ltd.
(“Starcore” or the “Company”) is pleased to announce that it has
entered into an agreement dated May 10, 2012 with Sprott Resource
Lending Corp. (“Sprott Lending”) pursuant to which Sprott Lending will
provide the Company with an $11 million credit facility (the
“Facility”), to be applied to settle Starcore’s forward sales contracts
with Investec Bank plc (“Investec”).
The Facility bears interest at 11% per annum, compounded and payable
monthly, with monthly principal payments to be made by Starcore
commencing May 31st, 2012, with the final payment due on or before April
30, 2013. The Facility may be repaid in full without penalty after
October 30, 2012. In consideration for the Facility, Sprott Lending was
paid a structuring fee of $110,000 and issued one million common shares
of the Company. The common shares are subject to a hold period
expiring September 11, 2012. All amounts outstanding under the Facility
will be repayable in the event of a change of control of the Company.
The Facility is guaranteed by the Company’s wholly owned subsidiary
Compañia Minera Peña de Bernal, S.A. de C.V. (“Bernal”), and will be
secured by a fixed and floating charge and specific registration over
all of the assets of the Company and Bernal, including the San Martin
gold and silver mine in Queretaro, Mexico, and a pledge of all of the
shares of Bernal held by the Company.
The Facility will be used to repay outstanding gold forward sales
contracts between Bernal and Investec originally entered into in January
2007, when Starcore acquired Bernal and the San Martin mine. Repayment
of the outstanding contracts is expected to occur on May 11, 2012.
Upon repayment of the forward sales contracts, the Company will be
released from all commitments to Investec under the January 31, 2007
convertible loan acquisition facility agreement.
“The Company’s Board and management fully support the move to close out
the hedge contracts to take advantage of the current gold market
conditions as well as to allow the Company to move away from the
restrictive covenants contained in our agreement with Investec that were
limiting our ability to move forward,” said Robert Eadie, CEO and
Interim President of Starcore. “The Company expects to generate
significant cash flow in the future and will be in a position to utilize
this cash to further advance exploration on our property with a view to
increasing reserves and resources and future production at San Martin.”
ON BEHALF OF STARCORE INTERNATIONAL
Signed “Robert Eadie”
Robert Eadie, Executive Chairman, Interim President and
Chief Executive Officer
FOR FURTHER INFORMATION PLEASE CONTACT: Telephone: 1-604-602-4935
Toll Free: 1-866-602-4935 / Facsimile: 1-604-602-4936
The Toronto Stock Exchange has not reviewed nor does it
accept responsibility for the adequacy or accuracy of this press
This press release includes certain statements that may be deemed
“forward-looking statements”. All statements in this release, other
than statements of historical facts, including the plans for the use of
the net proceeds of the Facility are forward-looking statements.
Although Starcore believes the expectations expressed in such
forward-looking statements are based on reasonable assumptions, such
statements are not guarantees of future performance and actual results
or developments may differ materially from those in the forward-looking
statements. Factors that could cause actual results to differ materially
from those in forward-looking statements include fluctuations in the
price of gold which result in the proceeds of the Facility being
insufficient to cover the amount of the forward sales commitments, and
general economic, market or business conditions. Investors are cautioned
that any such statements are not guarantees of future performance and
that actual results or developments may differ materially from those
projected in the forward-looking statements. For more information on the
Starcore, investors should review Starcore’s Annual Information Form
and annual Management Discussion & Analysis in Canada available on
the SEDAR website at www.sedar.com. Starcore does not undertake any
obligation to release publicly any revisions to any “forward-looking
statement” to reflect events or circumstances after the date of this
press release or to reflect the occurrence of unanticipated events,
except as may be required under applicable securities laws. Investors
should not place undue reliance on forward looking statements.
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