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Message: Granted 1% Gold Royalty
| February 17, 2009 |
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Aberdeen Granted 1% Gold Royalty
Aberdeen Crystallizes $55 million in value from Royalty loan |
| TORONTO, ONTARIO--(Marketwire - Feb. 17, 2009) - ABERDEEN INTERNATIONAL INC. ("Aberdeen", or the "Company") (TSX:AAB) is pleased to announce that it has been granted a 1% gold royalty on all of Simmer and Jack Mines Limited ("Simmers") Northwest Assets (JSE:SIM), including the Mine Waste Solutions project held by First Uranium Inc (TSX:FIU), a subsidiary of Simmer and Jack in South Africa. Aberdeen estimates the fair value of the 1% NSR, based on a discounted cash flow analysis, would be estimated at US$43.4 million. This estimate includes gold production from both Simmers and First Uranium and the repayment of the US$10 million principal advanced under the Loan Agreement with Simmer's. Simmers has now released the result of its Shareholders vote which was held on Monday, February 16, 2009, as requested by Aberdeen to convert its Loan Agreement to common equity. Simmer's has disclosed that the Company's request to convert its Loan to equity was voted down by its shareholders. The Aberdeen Loan Agreement states: "In the event that the approval of the shareholders of the Borrower has not been obtained within a reasonable period of time, the Lender shall be entitled to a 1.0% net smelter royalty on gold produced from the Borrower's Northwest assets (all properties held by the Borrower through Buffelsfontein Gold Mines Limited, listed in schedule B, will be subject to a net smelter royalty in favour of the Lender with the royalty being calculated on the revenue of those properties) which is in addition to the net smelter royalty referred to in section 2.9, with such additional royalty to be payable in perpetuity." As a consequence of denying our request to convert to equity, the 1% Net Smelter Royalty will be payable from October 16, 2008 being the date upon which the notice to convert the loan to equity was served on Simmers. As the 1.0% NSR is in addition to our Graduated Royalty (section 2.9 of the Loan Agreement), Aberdeen's position is that in addition to the 1% Net Smelter Royalty, the US$10 million loan which matured on December 31, 2008 (together with arrears of interest and royalties) will be re-payable no later than Monday February 23rd 2009. In addition to receiving a gold royalty on the Buffels underground mine and First Uranium's Tailings Recovery Project, Aberdeen would also be entitled to a 1% royalty on any gold produced from the greater Buffels Area comprising twelve claims including the Hartebeestefontein 422IP claim which contains the Strathmore project on which a pre-feasibility study was completed in January 2008. Simmers has reported that this project could potentially provide 11.9 million ounces of gold production which would be subject to the to the Company's 1% life of mine royalty. Key assumptions used in determining the fair value of the loan facility include the following: 1) receipt of a graduated royalty plus the 1.0% NSR from Oct 16, 2008 to December 31, 2008; 2) repayment of the US$10 million loan due December 31, 2008 ; 3) 5% discount rate; 4) US$850 gold price through fiscal year 2010, and US$700 thereafter; and, 5) life of mines and gold production estimates as publicly disclosed by Simmers and First Uranium. George Faught, Aberdeen's President and CEO, stated, "We are very pleased to have finally crystallized the value of the Loan agreement which to this point has had some uncertainty hanging over its value and as a consequence our share price has reflected that uncertainty. The 1.0% NSR offers tremendous value to Aberdeen's shareholders and we expect to monetize these royalties at the earliest opportunity to continue with our Resource Merchant Banking model." About Aberdeen International Inc: Aberdeen is a publicly traded global investment and merchant banking company focused on small cap companies in the resource sector. Aberdeen will seek to acquire significant equity participation in pre-IPO and/or early stage public resource companies with undeveloped or undervalued high-quality resources. Aberdeen will focus on companies that: (i) are in need of managerial, technical and financial resources to realize their full potential; (ii) are undervalued in foreign capital markets; and (iii) operate in jurisdictions with moderate local political risk. Aberdeen will seek to provide value-added managerial and board advisory services to companies. The Corporation's intention will be to optimize the return on its investment over an 18 to 24 month investment time frame. Aberdeen International Inc. Please visit the Company's web site at www.aberdeeninternational.ca or write us at [email protected]. |
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