2009-05-15 08:40 ET - News Release
Mr. Paul Espie of Pacific Road reports
SUBSTANTIAL SHAREHOLDER OF TIMMINS GOLD ADVISES THAT BOARD ALLOWED EXPIRY OF A SUPERIOR EQUITY FINANCING OFFER
It is with regret that Pacific Road Capital Management, manager of funds which have invested $19.3-million of equity in Timmins Gold Corp., advises that it has learned that the board of directors of Timmins Gold Corp. allowed, on May 8, 2009, the expiry of a financing proposal from Pacific Road, despite the fact that it fulfilled the equity needs of Timmins and was on terms superior to the first two closed tranches of its announced (see news issued in Stockwatch) March 2, 2009 financing. The purpose of the financing is the essential capital works and working capital for the reopening of the San Francisco gold mine in Sonora state, Mexico.
The financing offer made by Pacific Road and presented to the board of directors on May 6, 2009, was for a total of up to $7.5-million. It provided a guaranteed closing date, committed funds and superior pricing on the units. The Pacific Road offer included an arrangement fee (including all legal and advisory fees of the investors) below those fees paid by Timmins on its last two tranches. Pacific Road's most recent offer is the fourth that it has made to invest in the company since becoming a shareholder of Timmins. On March 2, 2009, management announced an equity offering of $10-million on board-approved terms. To this date, the company has only raised $4.96-million of equity, at terms substantially below those originally announced.
The management of Timmins has not to date adequately conducted the affairs of the company in a manner which addressed the financing requirements of the company and its projects. No notice has yet been given by the company in response to a request from two of its directors for a meeting of the board to be held on Tuesday, May 19, 2009. As a result, the two directors of Timmins have been obliged to make yet another request for a meeting of the board of the company to be held on or before Friday, May 22, 2009, to consider the financial position of Timmins and other issues related to management of the company and its corporate governance.
"As cornerstone shareholders of Timmins, we cannot see how these decisions by management could be in the interests of stakeholders and value maximization of the company in these highly uncertain capital markets," said Paul Espie, principal of Pacific Road.
"We have significant investment in Timmins and our objective is to see the San Francisco project brought to successful production without any further delay," said Mr. Espie.
We seek Safe Harbor.
