Market Overview

Donner Metals Ltd.: Increased Upfront Payment From Sandstorm, Working Capital Line of Credit, Private Placement

Share:

MONTREAL, QUEBEC--(Marketwire - Nov. 1, 2012) -

NOT FOR DISSEMINATION INTO THE UNITED STATES OF AMERICA OR DISTRIBUTION TO U.S. NEWSWIRE SERVICES

Donner Metals Ltd. ("Donner") (TSX VENTURE:DON)(FRANKFURT:D4M) reports that it has amended its existing Metal Purchase Agreement with Sandstorm Metals & Energy Ltd ("Sandstorm") whereby Sandstorm will provide an additional US$10 million upfront payment in exchange for the purchase of an amount equivalent to an additional 7% of the future copper, gold and silver production from the Bracemac-McLeod Mine.

Under the amended Metal Purchase Agreement, Sandstorm will have the right to purchase the equivalent of 24.5% of the future copper, gold and silver production from Bracemac-McLeod Mine. In addition, Donner no longer has the right to buy back from Sandstorm half of the original metal purchase amount. All other significant terms of the Metal Purchase Agreement remain the same.

Sandstorm has also agreed to provide Donner a working capital line of credit in an amount up to $4 million. The line of credit will bear 7.0% annual interest, compounded monthly and payable on the maturity date of February 1, 2014. A 1% standby fee, also payable on February 1, 2014, will be charged on the unused portion.

In addition, Donner has entered into an agreement with Haywood Securities Inc. ("Haywood") under which Haywood has agreed to act as agent for a private placement, on a best efforts agency basis, of up to $4.5 million of common shares of the Company designated as flow-through shares for purposes of the Income Tax Act (Canada) (the "Flow-Through Shares") at a price of C$0.20 per Flow-Through Share (the "Issue Price"). The first tranche of this private placement is in the process of closing.

Donner has also granted Haywood an option to sell up to an additional C$1 million of Flow-Through Shares at the Issue Price. The Flow-Through Shares will be subject to a four-month hold period.

The net proceeds from the sale of the Flow-Through Shares will be used primarily for the recently announced McLeod Deep exploration drill program and regional exploration which qualify as 100% Canadian Exploration Expense. Funds from the additional Sandstorm upfront payment and the loan will be used for the continued development of the Bracemac-McLeod Mine and general working capital.

This News Release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended, (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to or for the account or benefit of a U.S. person (as defined in Regulation S under the U.S. Securities Act) unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

About Donner Metals

Donner Metals is an exploration and development company focused on the zinc-copper Matagami Project, a joint venture project with Xstrata Canada Corporation - Xstrata Zinc Canada. Development of the Bracemac-McLeod deposit is currently well underway, with commercial production scheduled to begin in early Q2 2013.

ON BEHALF OF THE BOARD OF DONNER METALS LTD.

David Patterson, Chairman

FOR FURTHER INFORMATION PLEASE CONTACT:
Donner Metals Ltd. - Montreal
514.286.1665


Donner Metals Ltd. - Vancouver
604.683.0564 or Toll Free: 1-800-909-8311
donner@bed-rock.com
www.donnermetals.com

View Comments and Join the Discussion!