Silvermet Completes Joint Venture and Strategic Investment with Befesa
8 King Street East, Suite 1700 Toronto, Ontario, Canada M5C 1B5 Telephone: (416) 203-8336 Facsimile: (416) 368-5146
FOR IMMEDIATE RELEASE TSX Venture Exchange October 27, 2010 Symbol: SYI Toronto, ON
SILVERMET COMPLETES JOINT VENTURE AND STRATEGIC INVESTMENT WITH BEFESA
Silvermet Inc. (“Silvermet”) (TSXV: SYI) is pleased to announce the closing of the previously announced joint venture and strategic investment with an affiliate of Befesa Medio Ambiente, S.A. (“Befesa”) of Erandio, Spain. As a result, the Turkish operations are now held through the newly established joint venture company, Befesa Silvermet Turkey, S.L. (“Befesa Silvermet”).
In forming the joint venture, Cooper Island Investments, L.L.C. (“Cooper Island”) is no longer a participant in Silvermet’s Turkish operations. Befesa Silvermet begins operations on a strong financial foundation with a cash balance of $6 million available to make improvements to the existing Turkish operations.
Silvermet is pleased to announce that Asier Zarraonandia, CEO of Befesa Zinc, S.L.U. will be joining its Board of Directors. As part of the joint venture agreement, Befesa has acquired a 10% shareholding in Silvermet by completing a private placement for 16 million shares at $0.125 per share. The shares are subject to a statutory hold period expiring February 28, 2010.
“We are enthusiastic about our new partnership. Silvermet achieved record production of 3,615 dry metric tonnes (4,083 wet metric tonnes) zinc concentrates for the third quarter. We have achieved these operating levels as a result of the great efforts of our personnel. With the addition of Befesa’s expertise, we expect to build on this base to achieve even greater profitability in the future” said Stephen G. Roman, Chairman, President and CEO of Silvermet.
The acquisition by Befesa of the interest of Cooper Island was structured for tax reasons to include a step whereby the interest of Cooper Island was initially acquired by the Company and then immediately transferred to the benefit of Befesa. That step was technically a related party transaction for the Company for the purposes of Multilateral Instrument 61- 101 - Protection of Minority Security Holders in Special Transactions (“MI 61-101”). Silvermet relied on the exemption contained in section 5.5(b) of MI 61-101 from the requirement to obtain a formal valuation for the related party transaction, as Silvermet’s shares are listed on the TSX Venture Exchange.
Silvermet applied for and received an order dated October 25, 2010 from the Ontario Securities Commission granting discretionary exemptive relief from the requirement contained in section 5.6 of MI 61-101 to obtain minority approval for the related party transaction on the basis that the transaction was in substance an arm’s length transaction notwithstanding the fact that the transaction was structured for tax reasons to include a step that constituted a related party transaction for the Company.
About Silvermet:
Silvermet’s Waelz kiln facility in Iskenderun, Turkey has been operating since May 2009 to process EAFD that is produced by local steel mills. Silvermet produces a zinc oxide concentrate from the EAFD which is sold to smelters throughout the world.
About Befesa:
Befesa is an international company that provides solutions for managing and recycling industrial waste and for water generation and management, with a strong emphasis on social responsibility to help create a sustainable world. (www.befesa.com). Befesa is a subsidiary of Abengoa, S.A., a technology company that applies innovative technology solutions for sustainable development in the infrastructure, environment and energy sectors. (www.abengoa.com).
For further information, please contact:
Stephen G. Roman, Chairman, President & CEO Silvermet Inc.
Tel: (416) 203-8336 Website: www.silvermet.ca
THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION IN CANADA ONLY AND IS NOT AUTHORIZED FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.
The TSX Venture Exchange has in no way passed upon the merits of the transaction and has neither approved nor disapproved the contents of this press release.
Caution concerning forward-looking statements: The information in this release may contain forward-looking information under applicable securities laws. This forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those implied by the forward-looking information. Factors that may cause actual results to vary include, but are not limited to, inaccurate assumptions concerning the exploration for and development of mineral deposits, political instability, currency fluctuations, unanticipated operational or technical difficulties, changes in laws or regulations, the risks of obtaining necessary licenses and permits, changes in general economic conditions or conditions in the financial markets and the inability to raised additional financing. Readers are cautioned not to place undue reliance on this forward-looking information. The Company does not assume the obligation to revise or update this forward-looking information after the date of this release or to revise such information to reflect the occurrence of future unanticipated events except as may be required under applicable securities laws. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.