VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 19, 2009) - Late in the day on May 15, 2009, management of Timmins Gold Corp. ("Timmins" or the "Company") disseminated a press release containing a number of items of concern to Pacific Road Capital Management ("Pacific Road"), manager of funds which have invested $19.3 million of equity in Timmins.
In its press release dated May 15,2009, Pacific Road indicated it had made a superior offer (the "Offer") to provide up to $7.5 mm of equity to Timmins in order expedite bringing into production the San Francisco Gold property located near Hermosillo, Mexico. Pacific Road had no intention of making a takeover bid for the Company, any suggestion of such a motive would be misleading. As an investor, not an operator, Pacific Road has no mandate to takeover Timmins. Any suggestion of such a motive would be misleading.
Pacific Road's original investment in Timmins (announced in July 2008) required shareholder approval as per TSX Venture Exchange policies. Pacific Road received approval for its investment from Timmins shareholders at the Company's AGM in August 2008. It is unreasonable for Timmins management to put forth the position that the TSX Venture Exchange would not be willing to work with Timmins and Pacific Road to explore options for an expedited investment for the essential funding of the Company.
Pacific Road is concerned that Timmins management has been unable to secure the financing required to advance the San Francisco mine into production. Management announced the current fund raising on March 2nd, since then Management has raised less than half of the equity required and, despite repeated requests, directors have not seen any evidence of the $3 million of subscriptions mentioned in the Timmins press release last week. As of this date, there has been no public announcement of such subscriptions and no application for approval, to our knowledge, has been made to the TSX Venture Exchange.
Pacific Road's intention with respect to the Offer was to address the Company's equity shortfall in a timely and cost efficient manner. Management has been marketing its announced $10mm equity issue for 11 weeks and Pacific Road is of the opinion 48 hours was more than sufficient time for the board to determine whether it would accept Pacific Road's firm offer to subscribe on superior terms.
Pacific Road clarifies its ownership position in Timmins Gold which was erroneously stated in the Company's press release including: Pro forma the Company's recently announced closed equity tranches, Pacific Road currently owns approximately 14.7% of Timmins on a fully diluted basis; a further investment of $7.5 mm, as per our Offer, Pacific Road would own approximately 31.8% of Timmins on a fully diluted basis. Pursuant to its 2008 subscription agreement, Pacific Road has a right to subscribe for up to 20% of any equity raised whose purpose is to fund the development of the San Francisco Mine. At this time Pacific Road has not exercised this right.
Management's responsibility is to enhance stakeholder value. Pacific Road is concerned that Timmins management's recent actions indicate a motivation of entrenchment over stakeholder value. We will continue to keep shareholders apprised of developments as we press for good governance, transparency and, most importantly, recovery of stakeholder value at Timmins where there have been long and unnecessary delays over the last 12 months.
About Pacific Road:
The Pacific Road Resources Funds are private equity funds investing in the global mining industry. They are subscribed by leading institutions including endowments, pension funds and family offices in Europe, Australia, Asia and the USA and provide expansion and buyout capital for mining projects, mining-related infrastructure and mining services businesses located throughout resource-rich regions of the world. The Pacific Road Resources Funds are managed and advised by Pacific Road. The Pacific Road team, located in Sydney, Australia, New York and San Francisco, USA, is comprised of experienced investment professionals that have extensive knowledge and experience in the mining and infrastructure sectors. For further information about Pacific Road, please go to their website at www.pacroad.com.au. |
