Global Minerals arranges $2-million (U.S.) loan

2008-07-09 15:06 ET - News Release

Mr. George Heard reports

GLOBAL MINERALS ARRANGES $2 MILLION LOAN FINANCING

Global Minerals Ltd. has engaged Investec Bank (U.K.) Ltd. to provide a convertible promissory note of up to $2-million (U.S.). Investec's commitment is subject to completion of due diligence and formal documentation and Investec's final internal approvals. This strategic financing will provide Global Minerals with timely working capital to meet its short-term needs as it pursues opportunities for long-term financing.

The loan will be used by Global Minerals primarily for expenditures related to its Strieborna project. The proceeds will allow the company to part finance the prefeasibility study and permitting related to the Streiborna polymetallic project in Slovakia, and to provide working capital.

The company entered into a mandate letter and indicative term sheet with Investec to finalize the convertible loan facility in the principal amount of up to $2-million (U.S.). The loan will bear interest at the rate of U.S. LIBOR plus 10 per cent per year, with interest payable quarterly, in arrears. It is expected that the facility will be repaid in full upon the earlier of any capital raising by Global Minerals in the 12 months following the date of the facility agreement or first drawdown of a senior project finance facility. Investec will have the right to exchange all or part of the outstanding principal under the facility into common shares of Global Minerals by way of detachable warrants, at a conversion price equal to 120 per cent of the average of the volume-weighted daily closing price of Global's shares on the TSX Venture Exchange for the 20 trading days preceding and including the date of acceptance of the term sheet. The conversion terms are subject to exchange acceptance. If Global's common shares trade at a price 180 per cent, 200 per cent or 220 per cent greater than the conversion price for 20 consecutive trading days, the company will have the option to force exercise of 25 per cent, 50 per cent and 25 per cent of the warrants, respectively.

Investec will receive an arranging fee of 5 per cent of the debt facility payable in cash or, subject to the acceptance of the TSX Venture Exchange, the equivalent value in the company's common shares on the earlier of the first drawdown under the debt facility and one month after signing of the facility agreement.

Investec will have the first right of refusal on arranging the company's future financing needs for the Streiborna project.

Strieborna highlights:

• Current National Instrument 43-101-compliant resource calculation, completed by an independent consulting firm, AMC Pty. Ltd., estimated a current resource (measured and indicated) of 1,925,000 tonnes at 231.7 grams per tonne silver, 1.1 per cent copper, 0.7 per cent antimony and 33.65 per cent iron;

• Slovakia -- politically stable environment for mining operations (European Union member since 2004);

• Located near the historical mining town of Roznava in southeastern Slovakia;

• CTG has a 60-per-cent interest, and its Slovak partner, Pideco, holds a 40-per-cent interest;

• CTG can earn an additional 10 per cent through  the expenditure of $2-million (U.S.) over two years;

• CTG can increase its interest in the project to purchase the remaining joint venture share of the project for $2-million for each additional 10-per-cent tranche;

• Excellent existing infrastructure, including rail, power and road access.