Yukon-Nevada
Gold Corp. Announces Proposed Incentive for Early Exercise of
Share
Purchase Warrants to Fund Mine Expansion and Mill Upgrades
Vancouver, BC - February 4, 2011 - Yukon-Nevada Gold Corp. (Toronto Stock Exchange:
YNG; Frankfurt Xetra Exchange: NG6) Robert F. Baldock, the President
and CEO of Yukon-Nevada Gold Corp. (the "Company"), announces
that the Company proposes to raise additional working capital by offering
an incentive for the early exercise (the "Transaction") of eight
series of unlisted outstanding share purchase warrants of the Company (the
"Warrants"). �
As an
incentive to accept the exercise proposal, warrant
holders are being offered an 18% discount to the current exercise price.
The discount will compensate warrant holders for loss of leverage in their
investment, cost of financing the transaction and/or opportunity cost if
other investments are liquidated to fund the Transaction as well as any
resulting tax consequences.
Mr. Baldock states, "The proposed Transaction will
assist in providing the capital required to fund the Company's capital
budget for 2011.� Exercise of the
Warrants will go a long way toward cleaning up the corporate capital
structure and will provide much needed capital towards the successful
completion of our mine and mill refurbishment plans and gold production
expansion at Jerritt Canyon.
The
Company requires immediate working capital to fund its business plan.
Primary use of proceeds will be towards (but not limited to):
<!--[if !supportLists]-->-
<!--[endif]-->Construction of new lined tailings storage
facility as well as a secondary water storage facility to be completed
before winter 2011/12,
<!--[if !supportLists]-->-
<!--[endif]-->Upgrade to Digital Control Facility Monitoring
System to improve plant operating efficiencies by replacing the current
pneumatic system,
<!--[if !supportLists]-->-
<!--[endif]-->Installation of additional quench tank and related
items during the 2-week scheduled annual maintenance shutdown in May 2011,
<!--[if !supportLists]-->-
<!--[endif]-->Complete winterization of the plant including
construction of a containment building and installation of new ore drying
equipment that should be protected from climatic extremes,
<!--[if !supportLists]-->-
<!--[endif]-->Completion of remaining environmental obligations
as outlined in the Consent Decree with the Nevada Division of Environmental
Protection to keep our current compliance in good standing,
<!--[if !supportLists]-->- <!--[endif]-->Obtain underground equipment necessary to commence
operations at the SSX/Steer underground gold mine and continue development
of the Starvation
Canyon mine.
Mr. Baldock says, "We had record breaking bad weather
at Jerritt
Canyon this winter
that slowed and halted production at times. This has been an unacceptable
historic problem at this facility over the years and we now intend to fix
the problem once and for all by housing equipment that never should have
been out in the elements in the first place. Fortunately we have enough
spare capacity and stockpiled ore to make up the lost production now that
the weather is improving, and we still intend to hit our previously stated
gold production targets. This will be a "good as new" all weather
facility when we complete these necessary upgrades."
He adds,
"It is our intention to complete most of the necessary capital
projects in the 2011 calendar year so the Company can focus on growing
production at the milling facility and expansion of our reserve/resource
base through near-term acquisitions and organic exploration. We have the
only spare capacity for processing refractory sulfide ore in the Nevada
region and we see very little competition on the horizon because of
permitting challenges. It is essential that we complete the upgrading of
our fully permitted and operating facility so we can take advantage of the
vast supply of refractory ore available to us in this positive gold
environment."
The
Company has eight series of unlisted Warrants outstanding, with expiry
dates ranging from April 24, 2011 to August 13, 2013, and exercise prices
ranging from $0.08 per share to $0.40 per share. The Company proposes to
reduce the exercise price of each series of warrants by approximately 18%
for a period of 30 days, after which the exercise price shall revert to the
original exercise price. If all of the Warrants are exercised at their
respective reduced exercise prices, 235,823,053
additional shares, being 34.262% of the Company's current issued and
outstanding shares, will be issued for gross proceeds to the Company of $59,343,502.51.
The
transaction is conditional upon acceptance by the TSX and, in accordance
with Section 607(e) of the TSX Company Manual, the obtaining of
disinterested shareholder approval.�
The Company proposes to seek such disinterested shareholder approval
at a meeting of shareholders slated for March 8, 2011.� The Company will make a further
announcement advising when the offer commences and the date the offer
expires as well as details for acceptance of the offer.� The exercise price of any Warrants not
exercised on or before the 30-day exercise period will revert to their
original respective exercise prices.
Votes of
the common shares held by holders of the Warrants and their respective
associates and affiliates will not be included for the purposes of
obtaining such disinterested shareholder approval.� As a result, the votes attached to
384,003,989 shares, representing
the total number of shares held by the holders of Warrants, and their
respective associates and affiliates, will be excluded from the vote in
regards of the required shareholder approval.
Graham
Dickson, a director and the Chief Operating Officer of the Company,
currently holds, directly and indirectly, an aggregate of 2,396,000
(0.348%) common shares of the Company, and will be entitled to participate
in the early exercise of the Warrants.�
The maximum number of shares that may be issued to Mr. Dickson upon exercise of the Warrants is 100,000
shares, being 0.015% of the Company's current issued and outstanding
shares.� Upon completion of the
exercise of his Warrants, Mr. Dickson would then
hold 2,496,000 shares, being 0.363% of the Company's then issued share capital, on a
partially diluted basis, or 0.270% on a fully diluted basis.
Jean-Edgar
de Trentinian, a director of the Company,
currently holds, directly and indirectly through Orifer
SA, an aggregate of 188,700,500 (27.416%) common shares of the Company, and will be
entitled to participate in the early exercise of the Warrants.� The maximum number of shares that may be
issued to Mr. de Trentinian
upon exercise of the Warrants is 141,300,000 shares, being 20.529% of the
Company's current issued and outstanding shares.� Upon completion of the exercise of his
Warrants, Mr. de Trentinian
would then hold 330,000,500 shares, being 39.779% of the Company's then
issued and outstanding share capital, on a partially diluted basis, or
35.559% on a fully diluted basis.
Fran�ois Marland, a director of the Company, currently holds
53,545,000 (7.779%) common shares of the Company, and will be entitled to
participate in the early exercise of the Warrants.� The maximum number of shares that may be
issued to Mr. Marland
upon exercise of the Warrants is 27,500,000 shares, being 3.995% of the
Company's current issued and outstanding shares.� Upon completion of the exercise of his
Warrants, Mr. Marland
would then hold 81,045,000 shares, being
11.322% of the Company's then issued share capital, on a
partially diluted basis, or 8.774% on a fully diluted basis.
Shaun Heinrichs, the Company's Chief Financial Officer,
currently holds 260,000 (0.038%) common shares of the Company, and will be
entitled to participate in the early exercise of the Warrants.� The maximum number of shares that may be
issued to Mr. Heinrichs
upon exercise of the Warrants is 150,000 shares, being 0.022% of the
Company's current issued and outstanding shares.� Upon completion of the exercise of his
Warrants, Mr. Heinrichs
would then hold 410,000 shares, being
0.060% of the Company's then issued share capital, on a
partially diluted basis, or 0.044% on a fully diluted basis.
Sprott Asset Management
as a Portfolio Manager ("Sprott"), an
insider of the Company, currently holds an aggregate of 99,481,834
(14.453%) common shares of the Company, and will be entitled to participate
in the early exercise of the Warrants.�
The maximum number of shares that may be issued to Sprott upon exercise of the Warrants is 35,000,000
shares, being 5.085% of the Company's current issued and outstanding
shares.� Upon completion of the
exercise of its Warrants, Sprott would then hold
134,481,834 shares, being 18.593% of the Company's then issued share capital, on a
partially diluted basis, or 14.559% on a fully diluted basis.
Yukon-Nevada Gold Corp. is a North American gold
producer in the business of discovering, developing and operating gold
deposits. The Company holds a diverse portfolio of gold, silver, zinc and
copper properties in the Yukon Territory
and British Columbia in Canada
and in Nevada in the United
States. The Company's focus has been on
the acquisition and development of late stage development and operating
properties with gold as the primary target. Continued growth will occur by
increasing or initiating production from the Company's existing properties.
For more
information please contact:
The TSX has not
reviewed and does not accept responsibility for the adequacy or accuracy of
this release.
WARNING: The Company relies upon litigation
protection for "forward-looking" statements.
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 is available.
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