HIGHLIGHTS? Strategic alliance to be formed with one of the...

HIGHLIGHTS
? Strategic alliance to be formed with one of the largest steel groups
in China, Hebei Iron & Steel Group Co., Ltd. (HBIS), to fast track
development of the Buena Vista Iron Project;
? HBIS to assist sourcing of 100% project debt financing, on an
expedited basis;
? HBIS shall use its best efforts to assist Richmond to procure
financing of US $9 million to fund long lead time plant equipment;
? Initial A$2.5M capital to be injected into Richmond subject to
certain preconditions; and
? 80% offtake to be acquired by HBIS, and priority over the balance.
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Richmond Mining Limited (?Richmond? or ?Company?) announces that it and its
wholly owned US subsidiary Nevada Iron LLC (?Nevada Iron?) have signed a
Framework Agreement with Hebei Iron & Steel Group Co., Ltd. (?HBIS?) to create a
strategic alliance to fast track the development of the 100% Richmond controlled
Buena Vista Iron Project (?Project?) located in Nevada, USA.
Richmond?s Managing Director, Max Nind, said the agreement was mutually
beneficial for both, with the Company importantly gaining strategic support to
secure 100% of the financing for project development and HBIS obtaining a long
term stable supply of product to be underpinned by its shareholding in the
Company.
?This agreement is the culmination of around 9 months of negotiations and brings to
the Project an endorsement that steel producers see Buena Vista as being a long
term provider of high grade magnetite to the steel making market?, said Mr Nind.
?It is an exciting prospect to be working in partnership with HBIS to expedite the
development of the Buena Vista project?, he said.
Mr Nind confirmed the Company was aiming to be in production by the December
quarter 2012 and added that HBIS would assist in obtaining full financing.
?This deal will provide the impetus to quickly transform the Company into a
producer of high quality iron concentrate?, said Mr Nind.
ABN 98 123 423 987
103 Abernethy Rd Belmont WA 6104 PO Box 566 Belmont WA 6984 P +61 8 9277 9801 F +61 8 9277 6818
www.richmondmining.com.au
The principal terms of the alliance are:
? HBIS shall use its best efforts to procure for Nevada Iron the provision of
debt financing on commercial terms reasonably acceptable to Nevada Iron;
? HBIS shall use its best efforts to assist Richmond to procure financing US $9
million to fund long lead time plant and equipment;
? On the basis the US$161M Project financing is secured, HBIS will have the
right to 80% of the iron concentrate production for a 10 year period, and
priority over the balance;
? Subject to successfully securing the US$161M Project finance, relevant
government approvals and processes, a placement to HBIS of 6,250,000
shares, at an issue price of $0.40 per share, and the grant of that number of
options that would, if exercised, result in HBIS owning 19.9% of the
Company?s issued share capital (as at the date of this announcement that
number of options is 8,121,300) with each option being exercisable at $0.50
and expiring 24 months from the date of grant. The grant of the options is
subject to shareholder approval;
? While HBIS hold at least 15% of the issued capital of the Company they will
be entitled to nominate one Director to the Board of Richmond.
? Other than arising from the exercise of existing options or as may be
necessary to complete the exercise of the option to acquire the Project from
Kircher Mine Development LLC, Richmond has agreed not to issue any further
securities during the ?Exclusivity Period?. The Exclusivity Period shall expire
on 31 August 2011, when signed loan documentation shall be in place,
subject to earlier milestones also being met.
Background information on HBIS
The Hebei Group is one of the largest steel groups in China, formed by the merger
on 30 June 2008 of two major steel companies ? Tangshan Steel Group and Handan
Steel Group. The Group has a combined annual steel output of 40 Mt.
HBIS is headquartered in Shijiazhuang City, the capital of Hebei Province, which is
the largest steel making Province in China with estimated steel production for the
current year of around 140Mt.
Max Nind
Managing Director