Yellowhead Mining Inc. Announces $8 Million Private Placement

TSX:YMI

VANCOUVER, Nov. 19, 2013 /CNW/ - Yellowhead Mining Inc. ("Yellowhead" or the "Company") (TSX: YMI) announces that it has entered into an investment agreement (the "Investment Agreement") with Matco Investments Ltd. ("Matco"), a private investment firm based in Calgary, Alberta, pursuant to which Yellowhead has issued to Matco an $8 million secured convertible debenture (the "Debenture") on a private placement basis (the "Matco Financing"). Full conversion of the debenture into common shares of the Company is subject to shareholder approval at a special meeting of shareholders to be held on December 30, 2013.

The proceeds of the Matco Financing will primarily be used to complete the environmental assessment process for Yellowhead's 100% owned Harper Creek Project and for general corporate purposes.

Frank D. Wheatley, Yellowhead's CEO, noted that "Yellowhead is extremely pleased to have reached agreement with Matco to provide the Matco Financing, as this will allow Yellowhead to move forward with the environmental assessment process for the Harper Creek Project". Mr. Wheatley added that "completing the environmental assessment process will represent the next significant milestone in the development of the Harper Creek Project".

Matco Financing

The Debenture has a principal amount of $8,000,000.10, a maturity date of January 31, 2014 (the "Maturity Date"), bears interest at a rate of 9% per annum, calculated and payable monthly in arrears, and is secured by a first ranking security interest on all of Yellowhead's property and assets. All security will be released and discharged on the earlier of: 1) the automatic conversion of the Debenture, and 2) repayment of the Debenture together with accrued interest.

The Debenture is, subject to shareholder approval, convertible into 35,555,556 common shares in the capital of Yellowhead at a price of $0.225 per share (the "Conversion Price"), representing a 50% premium to the closing price of Yellowhead's common shares on November 18, 2013.

Shareholder Approval

The full conversion of the Debenture into 35,555,556 common shares of Yellowhead is subject to shareholder approval and Yellowhead has scheduled a special meeting of shareholders to be held on December 30, 2013 for purposes of seeking such shareholder approval.

Automatic Conversion. If shareholder approval is received, then the Debenture will automatically be converted into 35,555,556 common shares of Yellowhead at the Conversion Price, and Yellowhead will pay to Matco all accrued interest from the date of issue of the Debenture to the date of automatic conversion. Upon automatic conversion, Matco will own approximately 35.91% of the issued and outstanding common shares of Yellowhead. If shareholder approval is not received, then the Debenture will, subject to earlier voluntary conversion, be repayable in full on the Maturity Date, together with accrued interest and a funding fee of $250,000.

Voluntary Conversion. Matco has the right, at any time and from time to time, exercisable from the date of issue of the Debenture to the earlier of: (i) the date that shareholder approval is obtained; and (ii) the Maturity Date, to elect to convert up to a maximum of $3,566,250.00 of the principal amount of the Debenture into 15,850,000 common shares of Yellowhead at the Conversion Price. If Matco elects to exercise such right in full, then after conversion, Matco will own approximately 19.99% of the issued and outstanding common shares of Yellowhead, and the balance of the principal amount of the Debenture, together with all accrued interest, will be repayable to Matco on the date of such voluntary conversion.

Appointment of Director

Pursuant to the Investment Agreement, Matco was granted the right to designate one individual for appointment to the Board of Directors of the Company and Mr. Ronald Mathison has been appointed a director of the Company effective as of November 19, 2013. If, between the closing date of the Matco Financing and the next succeeding meeting of Company's shareholders at which directors are to be elected, a director of the Company resigns, then the Company will fill such vacancy with an additional individual nominated by Matco. In addition, for so long as Matco's proportional interest of common shares of the Company at the time of the recommendation by the Company of nominees for election to the Board of Directors is greater than 15%, Matco will have the right to nominate two individuals of its choosing for election to the Board of Directors of the Company at all meetings of the shareholders of Company at which directors are elected.

Matco Pre-Emptive Right

Matco was also granted a pre-emptive right pursuant to the Investment Agreement. If the Company wishes to issue or pursue an offering of common shares or securities convertible or exchangeable into common shares of the Company (collectively, the "Subject Securities") then, for so long as either the Debenture is outstanding, or the proportional interest ("Proportional Interest") of Matco at such time is greater than 10% of the outstanding common shares of Yellowhead, then Matco will have the right (the "Participation Right"), subject to TSX approval and compliance with applicable legal requirements, to subscribe for and purchase that number of Subject Securities obtained when the total number of Subject Securities is multiplied by the Proportional Interest of Matco at such time, on the same terms and at the same price that the Company is prepared to issue the Subject Securities to other prospective purchasers. The Participation Right will expire five years from the date of closing of the Matco Financing.

About Matco Investments Ltd.

Matco Investments Ltd. is a private investment corporation based in Calgary, Alberta. Matco is controlled by Mr. Ronald Mathison. Mr. Mathison also serves on the boards of Calfrac Well Services Ltd., Tesla Exploration Ltd. and Western Energy Services Corp.

About Yellowhead Mining Inc.

Yellowhead Mining Inc. is a development stage company with a 100% interest in the Harper Creek copper-gold-silver project located in the North Thompson region of British Columbia, Canada. The proposed Harper Creek mine will be a large scale, long life, low cost open pit copper mine, has a NI 43-101 compliant feasibility study, and is currently in the environmental permitting phase of development.

For more information on Yellowhead and the Harper Creek Project, please visit Yellowhead's website at www.yellowheadmining.com.

Forward Looking Statements

Except for statements of historical fact, this news release contains certain "forward-looking information" within the meaning of applicable securities laws. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements, including, among others, the accuracy of mineral grades and related assumptions, inherent operating risks, planned expenditures, proposed exploration and development at the Harper Creek Project, operating and economic aspects of the Harper Creek Project, as well as those risk factors identified in the Company's Annual Information Form filed under the Company's SEDAR profile. Yellowhead undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change except as required by law. The reader is cautioned not to place undue reliance on forward-looking statements. More detailed information about potential factors that could affect projected results is included in the documents filed from time to time with the Canadian securities regulatory authorities by Yellowhead.

SOURCE Yellowhead Mining Inc.