Vaudreuil-Dorion (Quebec), October 19, 2012- Rocmec Mining Inc. (the "Corporation" or "Rocmec") (TSX-V Symbol: RMI), is pleased to announce that its mining operations in Peru generated gold sales for an amount of approximately US$308,000 following the mill commissioning that produced a total of 200.3 gold ounces. Rocmec's 50 tpd Carbon-in-pulp (CIP) milling plant processed the mineralized ore and the gold was extracted from the gold loaded carbon at a recognized precious metal refinery located in Lima, Peru. The revenues generated from the gold sales were used to offset a portion of the development, production and milling costs of the Rey Salomon property.
The summer months enabled the Corporation to confirm
various metallurgic parameters, train the local workforce
and establish certain logistical procedures necessary to
support full time mill operations at the Rey Salomon
property. During the same period, underground development
progressed at a steady pace and aimed at building a safe
working environment. The resulting development ore was
processed directly at the Corporation's mill,
generating gold sales. The mining crew is now in place,
trained and ready to start underground mining
operations.
Rocmec is pleased with the progress made in such a short
period of time and fully recognizes the worthiness of the
property. In order to advance the start of production and
continue mine development on the Rey Salomon property,
additional funds will be required. The Corporation is
therefore pleased to announce that its current joint
venture partner, Chazel Capital Inc. ("Chazel"),
has agreed to raise $671,750 and, with the exception of an
amount of $90,000 to be disbursed directly to Rocmec, to
invest such amount in the Rey Salomon property in exchange
for an additional 15% interest in the project (the
"Transaction"). Taking into consideration this
investment, Rocmec's interest in the property shall be
reduced from 50% to 35%.
In connection with the Transaction, on October 18, 2012,
Rocmec and Chazel entered into an addendum (the
"Addendum") to the joint venture agreement
entered into by the same parties in November 2011 (as
announced by press release on November 15, 2011). The
Addendum provides for, among other things, the following
terms and conditions: (i) for an initial period of 7 years,
Rocmec will be entitled to 35% of the profits generated
from the Rey Salomon property while Chazel and its
financial partners will be entitled to 65% of the profits,
and (ii) at the end of the 7-year period, Rocmec will be
entitled to 60% of the profits whereas Chazel will be
entitled to 40% of the profits. The initial period of 7
years will commence once production at the Rey Salomon
property has reached 400 gold ounces per month. Until the
commencement of such initial 7-year period, the allocation
of the profits generated from the Rey Salomon property will
increase gradually from 50% to 65% in the case of Chazel
and decrease gradually from 50% to 35% in the case of
Rocmec pursuant to a schedule provided for in the Addendum
that is based on the aggregate amount raised by Chazel as
part of the total investment of $671,750.
Rocmec will remain the mine operator and will have the
option to buy back the 15% interest on or before July 31,
2013, at a price equal to the addition of the two following
amounts: (i) $300,000, being an amount that has already
been expended by Chazel and that will be credited from the
total amount of $671,750, and (ii) the portion of the total
amount of $671,750 exceeding $300,000 that will have been
raised by Chazel as of the date on which Rocmec exercises
its option to repurchase, carrying a 35% premium.
Mr. Gérald Désourdy, Rocmec's Chairman of the Board
states: "The progress accomplished and this
Transaction are key for the long term growth of Rocmec as a
mine operator. Thorough independent reviews and
negotiations took place for the Addendum with our joint
venture partner. Considering the fact that there is a
related-party relationship between the current Chief
Executive Officer of Rocmec and Chazel and in order to
maintain impartiality, it was determined that it was in the
best interests of our shareholders and essential to have an
independent review of the Addendum over which I presided
with the involvement of independent Board
members".
André Savard, who is the President and Chief Executive
Officer and director of the Corporation, is also the
Chairman and majority shareholder of Chazel and
consequently, the Transaction was concluded on a
non-arm's length basis and constitutes a "related
party transaction" as defined under Multilateral
Instrument 61-101 - Protection of Minority Security Holders
in Special Transactions ("MI 61-101"). The
Transaction is exempt from the valuation and minority
shareholder approval requirements of MI 61-101 by virtue of
the exemptions contained in Sections 5.5(a) and 5.7(1)(a)
of MI 61-101 based on that neither the fair market value of
the subject matter of, nor the fair market value of the
consideration for, the Transaction exceeds 25% of
Rocmec's market capitalization. Chazel and Rocmec were
not related parties at the time of signing the joint
venture agreement in November 2011 (described above),
however became related parties due to the appointment of
Mr. Savard as President and Chief Executive Officer and
director of Rocmec in February 2012.
Completion of the Transaction is subject to the approval of
the TSX Venture Exchange.
The Rey Salomon concessions are currently being developed
under a tight schedule at no cost and no dilution to our
shareholders under a joint venture agreement and represent
a key concept for the Corporation's corporate strategy
aimed at eliminating its debts and increasing its market
value.
Subject to the approval of the TSX Venture Exchange, Rocmec
also announces that it wishes to proceed with payment of an
amount totaling $31,357.61, representing the interest due
on the convertible redeemable unsecured debentures of
Rocmec, bearing an annual interest rate of 7.5% and
maturing in December 2014, through the issuance of 272,675
common shares of Rocmec at a deemed price of $0.115 per
share. As announced by Rocmec by way of press release on
May 8, 2012, the interest on such debentures is payable by
Rocmec on a quarterly basis in cash and/or common shares of
Rocmec, at its own discretion.
The common shares issued pursuant to the conversion will be
subject to a four-month and one day hold period from the
date of issuance of said common shares.
Rocmec is active in the exploration and the development of
gold resources in Quebec and Peru. The Corporation holds a
gold property with resources recognised in accordance with
NI43-101, a modular treatment plant and also an exclusive
license for the thermal fragmentation mining method for
exploiting narrow-vein ore deposits.
The company's growth strategy is based on:
The development of its gold deposits with the objective of
producing revenue from its operations;
• Increasing the value of its mining assets by
prioritizing the exploration targets; and
• The commercialisation and employment of its thermal
fragmentation technology.
For additional information:
John Stella, Investor relations (514) 718-7976
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need JavaScript enabled to view it.
André Savard, President & CEO (450) 510-4442
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Neither 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 certain statements that may be deemed "forward-looking statements". All statements in this release, other than statements of historical facts, that address future exploration drilling, exploration and production activities and events or developments that the Corporation expects, are forward looking statements. Although the Corporation 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 forward-looking statements. Factors that could cause actual results to differ materially from those in forward looking statements include market prices, exploitation and exploration successes, continued availability of capital and financing, and general economic, market or business conditions.
Corporation Minière ROCMEC Mining Inc. 162 Saint-Charles
Avenue, Vaudreuil-Dorion (Quebec) J7V 2L1
Tel: (450) 510-4442 Fax: (450)
510-9901 www.rocmec.com
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