Avnet Inc V.AVT

Financing

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VANCOUVER, Oct. 19 /CNW/ - Avanti Mining Inc. ("Avanti") is pleased to announce that it has entered into an off-take commitment letter with a Asian Steel producer ("Strategic Partner") for the sale of three million pounds per annum of molybdenum oxide produced from the Kitsault mine for a four year period with a price protection mechanism to be agreed to by the parties. This represents approximately 10% of the expected average annual production from the Kitsault mine during the term of the agreement. The Strategic Partner has the option to increase the off take quantity from 10% up to 20% of the total annual production from the Kitsault mine.
The same Strategic Partner has also entered into a non-binding letter of intent ("LOI") to enter into a partnership agreement pursuant to which it will acquire a ten (10) percent ownership interest in the Kitsault project. It will be a term of the partnership agreement that the Strategic Partner will assist in procuring up to fifty (50) percent of the total debt financing needs of the project. The amount of investment needed to earn the ten(10) percent partnership interest will be negotiated between the parties based upon the valuation reflected in the final feasibility study scheduled to be completed by AMEC by November 15, 2010 and due diligence to be conducted by the Strategic Partner. The Strategic Partner will fund its share of all future development expenditures of the Kitsault project after closing. The proposed off-take agreement and potential investment in the project are subject to any required regulatory approvals, third party consents, customary due diligence and negotiation of definitive legal documentation. The date for the completion of definitive agreements for these transactions is expected to be January 31, 2011; however, there is no certainty that the parties will be able to successfully negotiate definitive agreements or complete these transactions.
A J Ali, Chief Financial Officer, commented, "This is a significant first step in Avanti's strategy to sell up to 30% interest in Kitsault to fund the development of the project. Discussions are under way with several other parties for the remaining 20% Kitsault partnership interest. The assistance in arranging 50% of debt is very important because it facilitates arranging the balance of project financing needs of Kitsault. The Strategic Partner is a significant player in the global molybdenum market. This marks the beginning of what we hope will be a mutually beneficial long-term relationship."

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