Vancouver, B.C. - Starcore International Mines Ltd. (the “Company”) has secured a commitment for a US$10 million loan from a senior Mexican financial institution. The loan will have a term of four years, with the first principal payment not due until two years after draw-down. The loan will bear interest at Libor + 5% per annum, payable quarterly. The purpose of the loan is to pay down existing liabilities, including the outstanding amounts owed to Investec Bank (U.K.) Limited (“Investec”) under an existing loan facility. Draw down of the loan is subject to the execution of a definitive agreement (which has already been negotiated), the provision of a pledge of the shares of the Company’s operating subsidiary, Compañia Minera Peña De Bernal, S.A. de C. V. (“Bernal”), and a release of existing security over Bernal’s assets.
Currently, Investec holds a pledge of the Bernal shares and a security interest over the Bernal assets, as security for its US$13 million acquisition loan facility provided to the Company in connection with the Company’s acquisition of the San Martin mine in January of 2007. Approximately US$8.5 million remains outstanding under this loan facility. In connection with the Investec loan facility, the Company has remaining forward sale commitments of 56,165 ounces of gold at a price of US$731 per ounce. Investec has advised the Company that, in order to release its security interest and the pledge of the Bernal shares, it will require the Company to repay the loan facility and wind up the forward sales commitments. At gold prices in effect on the date of this news release, the Company does not have sufficient funds to both wind up the forward sales agreements and repay the Investec loan facility. The Company believes the terms of the loan from the Mexican financial institution and the two year principal repayment deferral are more favourable to the Company than the Investec facility. The Company is working on alternatives to repay the Investec facility, and wind up the forward sales commitments. The ability of the Company to wind up the forward sales commitments (thereby allowing Investec to release the security it currently holds over the shares and assets of Bernal, and enable the Company to pledge such security to the Mexican financial institution) is dependent upon the price of gold reducing to a level which would allow the Company to settle the forward sales commitments at a favourable cost or no cost to the Company. There is no guarantee that this event will occur in the near future, thereby allowing the Company to draw down the Mexican loan facility.
ON BEHALF OF STARCORE INTERNATIONAL
Signed “Robert Eadie”
Robert Eadie, President & Chief Executive Officer
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Toll Free: 1-866-602-4935 / Facsimile: 1-604-602-4936.
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