Lincoln Mining Announces Private Placement With Procon Mining For Up To $4,600,000 And Property Acquisition
September 5, 2012
Vancouver, British Columbia – Lincoln Mining Corporation, TSX-V: LMG ("Lincoln" or the "Company") announces it has signed a subscription agreement and a non-binding memorandum of understanding with Procon Mining & Tunnelling Ltd. ("Procon") providing for private placements of securities of the Company to raise up to $4,600,000 and future cooperation to facilitate the continued development of its mineral projects in Nevada towards production. The Company has also entered into a letter agreement with Laurion Mineral Exploration Inc. ("Laurion") for the purchase and assignment of an option to earn a 100% interest in the Bell Mountain property located in Churchill County, Nevada.
The Company has entered into a subscription agreement (the "Subscription Agreement") with Procon which provides for a non-brokered private placement of 24,000,000 common shares of the Company at a price of $0.05 per share for total proceeds of $1,200,000 (the "Initial Placement").
No finder's fees are expected to be issued in connection with the Initial Placement. All securities issued under the Initial Placement will be subject to a four month hold period from the closing date under applicable Canadian securities laws, in addition to such other restrictions as may apply under applicable securities laws of jurisdictions outside Canada. The Initial Placement is subject to all necessary regulatory approvals including from the TSX Venture Exchange (the "TSXV").
Lincoln intends to use the proceeds raised from the Initial Placement towards the purchase price for the Bell Mountain acquisition discussed below, to advance the work programs on Lincoln's other mineral projects and for general working capital purposes.
The Subscription Agreement also provides for:
In addition, the Subscription Agreement provides that concurrent with the closing of the Second Financing, the Company will appoint to its board of directors four nominee directors of Procon, three of whom will replace three of the Company's existing directors, resulting in Procon's nominees representing a majority or four of the resulting seven member board of directors of the Company (collectively, the "Director Changes").
Completion of the Second Financing and the Director Changes are subject to receipt of necessary TSXV and disinterested shareholder approval for the creation of Procon as a new "Control Person" of Lincoln under TSXV policies. Lincoln plans to seek the necessary shareholder approval at its upcoming annual general meeting scheduled to be held on October 30, 2012. If the necessary approvals are obtained, pursuant to the Subscription Agreement Lincoln and Procon will complete the Second Financing and the Director Changes by November 9, 2012. Further details will be provided in the Company's information circular for its annual general meeting.
The Company has also signed a non-binding memorandum of understanding with Procon (the "MOU") which outlines the basis on which the Company plans to collaborate with Procon to develop the Pine Grove and Bell Mountain properties in Nevada (collectively, the "Project") through a wholly-owned subsidiary of the Company ("ProjectCo").
The non-binding MOU proposes that, among other things:
All of the above-listed provisions represent non-binding statements of intention between Lincoln and Procon pursuant to the MOU, and the detailed terms of any such potential transactions would be contained in definitive binding agreements negotiated between the parties. There is no assurance that any definitive binding agreements will be entered into or that a positive pre-feasibility study will be completed in respect of the Project. In the event any of the above-listed transactions proceeds, they will be subject to receipt of all necessary TSXV and shareholder approvals and other requirements of applicable Canadian securities laws, as may be applicable, including the requirements under TSXV policies and Multilateral Instrument 61-101 regarding related party transactions.
Procon is a full service mining contractor, headquartered in Burnaby, British Columbia. Further details may be obtained at Procon's website at www.procongroup.net or by contacting Procon at Suite 108, 4664 Lougheed Highway, Burnaby, British Columbia, Canada V5C 5T5.
After giving effect to the Initial Placement, Procon will own 24,000,000 common shares of the Company, representing 19.76% of the issued and outstanding common shares of the Company. Subject to receipt of necessary approvals, upon the completion of the Second Financing Procon will own 46,000,000 common shares of the Company and Convertible Debentures convertible into 23,000,000 common shares of the Company, which based on the current number of common shares of the Company issued and outstanding, would represent 32.06% of the Company’s common shares (basic) and 41.45% of the Company’s common shares on a partially diluted basis giving effect to the conversion of the Convertible Debentures and no other outstanding convertible securities of the Company.
Procon has agreed to acquire securities of the Company under the Initial Placement and the Second Financing for investment purposes and to facilitate the transactions contemplated by the MOU. Procon is relying upon the “accredited investor” exemption from the prospectus requirements of applicable securities laws in connection with the purchase of securities pursuant to the Initial Placement and the Second Financing.
Bell Mountain Acquisition
Letter Agreement with Laurion
Lincoln has signed a binding letter agreement with Laurion providing for the purchase by Lincoln (or a subsidiary) from Laurion of certain unpatented mining claims and the assignment and assumption of Laurion's option to earn a 100% interest in the Bell Mountain property located in Churchill County, Nevada. The purchase price is an aggregate of $2,350,000 cash, payable by Lincoln to Laurion as follows:
The transaction under the letter agreement remains subject to various conditions, including receipt of necessary approvals from the TSXV, Lincoln's acceptance of the physical condition and status of title of the property, and receipt of all necessary third party consents. Laurion shall retain the right to reassert its interests and rights in the Bell Mountain option in order to be able to exercise the option to earn a 100% interest in the project in the case that Lincoln does not complete the remaining expenditure requirements of $1,755,000 or Lincoln defaults on any of the other obligations assumed under the option.
Pursuant to the letter agreement, the parties must use their best efforts to negotiate and execute a definitive agreement incorporating the terms of the letter agreement within 30 days.
Bell Mountain Property
The Bell Mountain property is located approximately 95 miles southeast of Reno, Nevada. It is comprised of 26 unpatented lode claims optioned by Laurion from Globex Nevada Inc. (“Globex”) covering an area of approximately 217 hectares. In addition, Laurion staked 119 contiguous lode claims in 2010 totaling 995 hectares. The total Bell Mountain land package is 1,212 hectares (2,900 acres). The property is in the Fairview mining district and encompasses portions of sections 1 through 3 and 10 through 16 in Township 15 North, Range 34 East and parts of sections 35 and 36 in Township 16 North, Range 34 East, Mount Diablo Base and Meridian, Churchill County, Nevada.
Laurion has the right and option to earn a 100% interest in the property from Globex pursuant to an exploration and option agreement dated June 28, 2010 (the "Globex Agreement"). In order to complete the exercise of the option to acquire a 100% interest in the property, an additional $1,755,000 in exploration expenditures must be incurred on the property by June 28, 2015.
As disclosed in Laurion's news release dated May 4, 2011, Laurion filed a National Instrument 43-101 ("NI 43-101") technical report dated May 3, 2011 prepared by Telesto Nevada Inc. and titled "NI 43-101 Technical Report for the Bell Mountain Project, Churchill County, Nevada" (the "Technical Report"). The Technical Report, which is available under Laurion's profile on the SEDAR website (www.sedar.com), contains the following resource estimate on the Bell Mountain property as at May 3, 2011:
Table 1 – Global Bell Mountain Resource Estimate
• Recovery ‐ Gold 80%, Silver 51%
• Total Operating Costs ‐ $11.43/ton (mining, processing and G&A)
• Gold Equivalent Ratio ‐ 55 to 1
Mr. Jeffrey Wilson, the Company's Vice President Exploration and a "qualified person" under NI 43-101, reviewed the Technical Report on behalf of Lincoln. To the best of Lincoln's knowledge, information and belief, there is no new material scientific or technical information that would make the disclosure of the above mineral resources inaccurate or misleading. Lincoln plans to file a technical report on the Bell Mountain property within 180 days of this news release in accordance with the requirements of NI 43-101.
The Bell Mountain property is subject to two royalties which will take effect upon commencement of commercial production. The first royalty is held by N.A. Degerstrom Inc. (a previous property owner/operator) which retains a 2% net smelter return royalty which can be acquired for US$167,000. In addition, pursuant to the Globex Agreement, Globex will maintain a sliding-scale gross metal royalty ("GMR") on all mineral production (gold, silver, etc.) benchmarked upon the price of gold (1% GMR at a gold price under US$500/troy ounce, 2% GMR at a gold price between US$500 and US$1200/troy ounce and 3% GMR at a gold price over US$1200/troy ounce).
Pursuant to the Globex Agreement, upon exercise of the option and the acquisition of a 100% interest in the Bell Mountain property from Globex, Lincoln (as assignee of Laurion) would be required to pay annually a $20,000 advanced royalty payment which would be credited against the royalty payable to Globex described above.
The Company also announces that Sabrina Jones has stepped down as Vice President, Corporate Affairs and Corporate Secretary but continues with the Company and Paul Saxton will temporarily fill the Corporate Secretary position.
Lincoln Mining Corp. is a Canadian precious metals exploration and development company with several projects in various stages of exploration and development which include the Pine Grove gold property in Nevada, the Oro Cruz gold property in California and the La Bufa gold-silver property in Mexico. In the United States, the Company operates under Lincoln Gold US Corp., a Nevada corporation.
Mr. Jeffrey Wilson, the Company's Vice President Exploration and a "qualified person" under NI 43-101, reviewed and approved the scientific and technical information contained in this news release.
For further information, please contact Investor Relations at 604-688-7377 or visit the Company's website at www.lincolnmining.com.
On behalf of Lincoln Mining Corporation
Paul Saxton, President & CEO
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
THIS PRESS RELEASE INCLUDES FORWARD-LOOKING STATEMENTS OR INFORMATION. ALL STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACT INCLUDED IN THIS RELEASE, INCLUDING WITHOUT LIMITATION, STATEMENTS REGARDING FUTURE PLANS AND OBJECTIVES OF LINCOLN IN RELATION TO COMPLETING PRIVATE PLACEMENT FINANCINGS AND DEVELOPING THE PINE GROVE AND BELL MOUNTAIN PROJECTS ARE FORWARD-LOOKING STATEMENTS THAT INVOLVE VARIOUS RISKS AND UNCERTAINTIES. THERE CAN BE NO ASSURANCE THAT SUCH STATEMENTS WILL PROVE TO BE ACCURATE AND ACTUAL RESULTS AND FUTURE EVENTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN SUCH STATEMENTS. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE COMPANY'S PLANS OR EXPECTATIONS INCLUDE THE RISK THAT ACTUAL RESULTS OF FUTURE EXPLORATION WORK, INCLUDING DRILL RESULTS AND RESULTS OF ENGINEERING AND METALLURGICAL STUDIES, WILL NOT SUPPORT THE COMPANY'S PLANS TO ADVANCE ITS NEVADA PROJECTS; THE UNCERTAINTY OF THE GEOLOGY, GRADE AND CONTINUITY OF MINERAL DEPOSITS (INCLUDING IN RESPECT OF THE BELL MOUNTAIN PROPERTY) AND THE RISK OF UNEXPECTED VARIATIONS IN MINERAL RESOURCES, GRADE AND/OR RECOVERY RATES; COST OVERRUNS AND PROJECT DELAYS; AVAILABILITY OF CAPITAL AND FINANCING IN CONNECTION WITH THE COMPANY'S PROPOSED NON-BROKERED PRIVATE PLACEMENTS OR OTHER FINANCINGS; GENERAL ECONOMIC, MARKET OR BUSINESS CONDITIONS; FLUCTUATING METAL PRICES; REGULATORY CHANGES; TIMELINES OF GOVERNMENT OR REGULATORY APPROVALS AND OTHER RISKS DETAILED HEREIN AND FROM TIME TO TIME IN THE FILINGS MADE BY THE COMPANY. THE COMPANY MAKES ALL REASONABLE EFFORTS TO UPDATE ITS CORPORATE MATERIAL, DOCUMENTATION AND FORWARD-LOOKING INFORMATION ON A TIMELY BASIS.
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