Yellowhead Mining Inc. Announces Loan and Intent to Conduct Rights Offering

TSX:YMI

VANCOUVER, Aug. 4, 2015 /CNW/ - Yellowhead Mining Inc. ("Yellowhead" or the "Company") (TSX: YMI) announces that its board of directors, subject to regulatory and legal approvals, has approved a bridge loan of $500,000. In addition, the Company intends to undertake a rights offering to its shareholders to provide working capital and to advance the environmental permitting for Yellowhead's 100% owned Harper Creek Project.

Bridge Loan

The Company has agreed with Matco Capital Ltd. ("Matco") to borrow $500,000 by way of a secured bridge loan at an interest rate of 10% per annum and maturing on December 31, 2015 (the "Loan") and evidenced by a promissory note issued by the Company to Matco, subject to approval from the Toronto Stock Exchange (the "TSX"). Matco is a significant shareholder of the Company and is wholly owned by Ronald Mathison, a director of the Company. The proceeds of the Loan will be used to provide working capital for the Company. To secure the obligations of the Loan, the Company has agreed to enter into a general security agreement to grant to Matco a first priority general security interest over all the assets and undertaking of the Company (the "Security").

Rights Offering

The Company also intends to undertake a rights offering to shareholders ("Rights holders") for the purchase of common shares of the Company.  The rights offering will be subject to definitive terms and conditions, as well as receipt of approvals from the TSX and securities regulatory authorities. Proceeds of the rights offering will be used to repay the Loan, to provide working capital for the Company, and to advance the environmental assessment permitting for Yellowhead`s 100% owned Harper Creek Project. Under the rights offering, Rights holders will be able to subscribe for more than their proportionate share of common shares should not all Rights holders take up their pro rata share.

Matco holds approximately 36% of the Company's issued and outstanding shares and has committed to subscribing for their proportionate share of common shares under the rights offering.

Further information regarding the proposed rights offering will follow in due course through subsequent announcements as well as a rights offering circular which will be filed and sent to shareholders of record on a date to be determined.

Related Party Transaction

Because Matco is a significant shareholder of the Company and the secured lender under the Loan, the Loan and the grant of the Security constitute related party transactions within the meaning of Multilateral Instrument 61-101. Management considers the Loan and the grant of the Security to be advantageous as it provides additional liquidity and financial flexibility to the Company and management also considers the terms of the Loan to be reasonable in the context of the market. The Loan was reviewed and approved by the disinterested members of the Company's board of directors. The material change report in relation to the Loan will be filed less than 21 days before the expected closing date of the Loan as the Company wishes to complete the Loan as soon as commercially feasible after all required approvals are obtained. The Loan shall be exempt from the formal valuation and minority approval requirements of Multilateral Instrument 61-101 as it represents less than 25% of the Company's market capitalization.

About the Harper Creek Project

Harper Creek is a proposed 70,000 tonnes-per-day open pit copper mine with a 28 year mine life, located in the Thompson – Nicola region of British Columbia near Vavenby.  Harper Creek has a four year development period, with the initial two years focused on environmental and construction permitting, and the second two years dedicated to construction.  When developed, Harper Creek will provide up to 600 jobs during construction and up to 450 permanent jobs during operations.

About Yellowhead Mining Inc.

Yellowhead Mining Inc. is a development stage company with a 100% interest in the Harper Creek Project, located in the North Thompson - Nicola 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.

Forward Looking Statements

Except for statements of historical fact, this news release contains certain "forward-looking information" and "forward-looking statements" 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 and information include statements regarding the completion of the Loan, undertaking and completion of the rights offering described in this release, the use of proceeds, and the exercise of rights by Matco or any directors. 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, receipt of TSX and securities regulatory approvals, completion of the Loan, undertaking and completion of the rights offering described in this release, the use of proceeds, the exercise of rights by Matco or any directors, 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.