Kola Mining Provides Corporate Update, Including Financing and Debt Restructuring
Vancouver, February 24, 2012 – Kola Mining Corp. ("Kola Mining" or "the Company") (TSXV: KM, Frankfurt: C8M) Mr. Sergei Dubovik is pleased to provide this update on corporate activities including financing and debt restructuring.
With respect to the Company’s officers it should be noted that Mr. Sergei Dubovik will also serve as Corporate Secretary instead of Mr. Saklakov. This will allow Mr. Saklakov to focus on corporate finance activities for the Company.
Work has been ongoing on metallurgical testing on the Company’s Souker project in Russia. As has been previously announced the initial metallurgical testing program was unsuccessful and since then work has been ongoing on identifying a solution to the metallurgical challenges. As has been previously announced the Company conducted additional testing to assess the feasibility of the application of bioleaching technology for the Souker deposit mineralized materials. Bioleaching technology is used successfully by Talvivaara Mining Company Plc for its polymetallic deposits, Kuusilampi and Kolmisoppi, located not far from Souker, in Sotkamo, eastern Finland.
The preliminary results from September 2011 laboratory testing of the ore excavated on the Souker deposit site indicated that the application of bio leaching was able to increase nickel recovery to up to 94%. The Company has since then taken steps to retain process consultants to scale up the bio leaching testing of the Souker mineralized materials to assess testing for recoveries from large volumes of mineralized materials. This work is now ongoing and is not scheduled for completion until end of the second quarter of calendar 2012. Once this work is completed, and assuming the bench scale test results are positive, then the Company will apply to the applicable government departments to amend the terms of the underlying license to take into account the application of this new technology for future development of the property.
The Company has finalized terms for a private placement financing to raise up to $500,000 of gross proceeds. The Company will issue up to 2,000,000 units at $0.25 per unit with each unit comprising a share and a half warrant. Each full warrant will entitle the holder to purchase an additional share for a period of three years at a price of $0.375 per share.
In addition, the Company has agreed to debt settlement terms with its debenture holders. The Company has previously issued debentures which matured in February 2011, the debentures and accrued interest were repayable at maturity, however, the Company did not settle the amounts owing and the debentures have been in default. The Company has reached an agreement in principle to settle all amounts owing, including interest, and the debenture holders will receive units at $0.25 per unit with each unit comprising a share and a half warrant. Each full warrant will entitle the holder to purchase an additional share for a period of three years at a price of $0.375 per share. The Company will issue up to 2,582,394 units to settle all amount owing to the debenture holders. The debenture holders are all arm’s length investors.
In addition to these debentures the Company also has outstanding debts on the acquisition of the Souker nickel project and the Bougnay gold project. Negotiations are ongoing on the outstanding Souker debt but the Company is pleased to have concluded an agreement to eliminate all outstanding debt on the Bougnay acquisition in consideration for a payment of approximately US$40,000. With this payment the Company has eliminated 3rd party debt of about $800,000. Mr. Dubovik expressed the following view: “This is a key agreement that has been concluded, the debt was non recourse and in the end a mutually acceptable agreement was concluded.”
To find out more about Kola Mining Corp., please visit the Company website at www.kolamining.com.
On behalf of the Board of Directors of Contact:
KOLA MINING CORP.
Kola Mining Corp.
"Sergei Dubovik" 604.694.1600 www.kolamining.com Sergei Dubovik Director and CEO
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