On site at present, Timmins Gold's mining and crushing operations are continuing with the available Komatsu shovel and six Caterpillar 100 ton trucks until the full mining fleet arrives. Over 100,000 metric tonnes of ore have been stacked on the heap leach pads and gold leaching has begun.
| May 15, 2009 |
| Timmins Gold Corp.: Corporate Update |
VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 15, 2009) - The Board of Directors of Timmins Gold Corp. (TSX VENTURE:TMM) ("Timmins"), excluding the two nominees of Pacific Road Capital Management ("PRCM"), issue this response to the press release of PRCM dated May 15, 2009.
Timmins received an equity proposal from PRCM on May 7, 2009 after Timmins had closed approximately $5 million of the $10 million unit offering announced on March 2, 2009.
The PRCM financing proposal was open for acceptance for less than 48 hours. The Board of Directors of Timmins held an extraordinary meeting on short notice on May 8, 2009 to consider the PRCM proposal. The PRCM proposal would have increased PRCM's ownership of Timmins from approximately 19% to 36% on a fully diluted basis.
Consequently, the PRCM proposal would have required shareholder approval, a process that would have entailed considerable expense for Timmins without any assurance that shareholder approval could be obtained. Any funds from the PRCM proposal in excess of 20% of the financing could not have been used by Timmins until after shareholder approval was obtained which would have potentially delayed the completion of construction and the opening of the San Francisco mine. In addition, acceptance of the PRCM proposal would have required Timmins to cancel new subscription commitments for $3 million.
Although the PRCM proposal was at a price of $0.04 per share greater than the current financing, the Board was concerned that this represented a completely inadequate premium for the control position that PRCM would have obtained.
Due to the issues arising from the PRCM proposal, the Board asked PRCM to extend its offer for a period of two weeks in order that Timmins could properly consider the proposal and receive the appropriate advice. Timmins' request for additional time to consider the PRCM proposal was refused.
Timmins is pleased that PRCM thinks highly enough of the San Francisco gold project in Sonora, Mexico (the "San Francisco Mine") that it would seek to substantially increase its ownership in Timmins.
As announced in a news release dated March 2, 2009, Timmins has engaged the CPM Group of New York to assist it with the generation and evaluation of project debt proposals for the development of the San Francisco Mine. Timmins is pleased with the progress in respect to project debt proposals received to date.
The objective of management is the development of the San Francisco Mine and its other projects for the benefit of all shareholders and stakeholders. |
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