Adriana Resources Inc.
Adriana Resources Inc. Adriana Resources Inc. Adriana Resources Inc. Adriana Resources Inc. Adriana Resources Inc.
Adriana Resources Inc.
 August 20, 2008
Adriana Partners With ArcelorMittal

 Adriana Resources Inc. ("Adriana" or the "Company") - (TSX-V: ADI) is pleased to announce that it has reached an agreement (the "Port Agreement") with ArcelorMittal, the world's leading steel company, on the principal terms for the development of an iron ore port facility in the State of Rio de Janeiro, Brazil (the "Port"). The Port will be constructed on lands acquired by Adriana in January 2008 (the "Joint Venture").

Highlights

Adriana will partner with ArcelorMittal to advance an iron ore strategy to become a fully integrated iron ore producer. The Joint Venture will include the following material elements:

  • Through a series of transactions, ArcelorMittal will acquire 80% of the Port for total consideration of approximately $40.5 million USD with Adriana holding the remaining 20%;

  • ArcelorMittal has agreed to acquire up to 19.9% of the Company's common shares which represents up to $25 million CDN (or up to approximately 24,900,000 common shares) in two private placements and will also be granted a seat on Adriana's Board of Directors;

  • The parties will each fund their pro rata portion of the Port development costs estimated to total approximately $250 million USD for the 10 million tonne per annum ("Mtpa") port;

  • ArcelorMittal will assist Adriana in sourcing funding for Adriana's portion of the Port development costs ("Port Debt");

  • The parties will share in the capacity of the Port, in proportion to their ownership and Adriana expects to have a minimum of 2 million tonnes iron ore throughput with the planned development of the Port to 10Mtpa;

  • ArcelorMittal and Adriana have agreed to investigate future strategic and mutually beneficial world-wide opportunities; and

  • Upon closing the Port Agreement and related financings, Adriana expects to have over $65 million CDN in working capital inclusive of the above referenced private placements with ArcelorMittal.
Michael Beley, President and CEO of the Company stated, "Three years ago, Adriana recognized the surging mineral super cycle and through strategic partnerships with Athena and WorldLink, quickly identified the need for a new iron ore port facility in Brazil that would create an export opportunity to deliver iron ore to the "End User". Today we have partnered with the leading steel corporation in the world to export iron ore from Brazil. Partnering with ArcelorMittal is a significant milestone in the advancement of our Brazilian iron ore strategy. ArcelorMittal brings the global expertise in mining, ports, seaborne shipping logistics and the ability to finance large infrastructure and mining projects through to operation."

Aditya Mittal, Chief Financial Officer and Member of ArcelorMittal's Group Management Board, stated, "The planned port facility at Sepetiba Bay in Brazil is the ideal captive solution to deliver access to the export market for ore from the Iron Quadrangle region."

Background to the Port Development

The acquisition of the Port lands was disclosed in the Company's news release dated January 10, 2008. In summary, the Company purchased a total of 771,818 square meters of land on the coast of Brazil (Bay of Sepetiba) for the development of an iron ore port facility. The purchase of an additional 85,757 square meters is expected to be completed during the third or fourth quarter of 2008. Since January 2008, the Company has been developing key strategic relationships and establishing a team of mining, port engineering, shipping and iron ore trading professionals to assist in advancing the Company's iron ore strategy.

Prior to the Port Agreement, the Company had commenced the engineering and permitting required to develop a port facility capable of handling 5 - 10Mtpa of iron ore at inception and increasing to a potential 50 million tonnes by year five through the accelerated development of a deep water port facility. The Port Agreement is the culmination of the Company's strategy in Brazil to develop the port facility with an end-user of iron ore. Given the capital-intensive nature of the project, the Company expects that the Port Agreement will establish the required funding, technical and regional expertise, and industry recognition to move the project through to completion and revenue generation.

Pursuant to the terms of the Port Agreement, ArcelorMittal has agreed to jointly develop the Port with the Company and acquire 80% of the Port for a lump-sum payment of approximately $40.5 million USD. The Company will retain the remaining 20% of the Port with pre-emptive rights until the Port reaches a capacity of 20Mtpa.

ArcelorMittal will use reasonable endeavours to assist Adriana in obtaining its portion of the Port Debt. Each party undertakes that it will be responsible for servicing and repaying its respective share of the Port Debt, consistent with its percentage ownership. The Company believes this support will substantially minimize dilution to the Company's common shareholders. In addition, ArcelorMittal will own 80% of the proposed port capacity while the remaining 20% will be retained by the Company. Port capacity in excess of 20Mtpa will be subject to further negotiation and may result in the Company increasing its utilization rights.

The two companies also agreed to co-operate to explore future strategic and mutually beneficial world-wide opportunities, although neither party is obliged to enter into any agreements.

Pursuant to the terms of the Port Agreement, the Company has agreed to acquire all of the third party owned interests in Brazore Holdings Ltd. ("Brazore Barbados"), of which the Company currently beneficially owns 60% of the outstanding issued share capital. The acquisition cost for the minority interest, held by Athena Resources L.L.C. ("Athena"), will be $19.6 million USD. The Company and Athena have agreed that up to $19.6 million USD of the purchase price will be paid in shares of the Company at a deemed price of $1.10 CDN. In 2006, Athena brought the Port opportunity to Adriana based on Adriana management's previous successful track record within Brazil and ability to advance projects on a global scale. Adriana and Athena continue to work closely together to review other opportunities within Brazil.

In addition to the consolidation of the minority interest in Brazore Barbados, the Company has agreed to acquire the minority interests of its Brazilian subsidiary for consideration of approximately $3.5 million USD. The Company and the minority interest holders have agreed that up to $1 million USD of the purchase price may be paid in shares of the Company at a deemed price of $1.10 CDN.

The Company's agreement with the WorldLink Group in respect of port utilisation has been amended to match the Company's Port off-take capacity of 20%. No further obligations are contemplated in connection with the WorldLink agreement.

The Port Agreement is subject to applicable regulatory and corporate approvals and the negotiation and execution of a definitive agreement by the parties which is anticipated to be concluded by September 30, 2008 (the "Definitive Agreement").

Upon completion of the proposed transactions Adriana will move forward with three strategic alliances: ArcelorMittal, WorldLink Group and Athena Resources L.L.C. Such partnerships and supported iron ore strategy will allow minimal dilution for shareholders for future project financings.

Private Placements

In connection with the transaction, ArcelorMittal has agreed to participate in a non-brokered private placement for proceeds of $6.45 million CDN (the "Debenture"). The Debenture will have a three-year term and will bear interest at 7% per annum. The principal amount of the Debenture is convertible into common shares of the Company at a conversion price of $0.90 if exercised in the first two years of the Debenture and at a price of $0.99 if exercised in the third and final year of the Debenture. Interest on the Debenture will be convertible at the market price of the Company's shares on such conversion date. Up to 7,166,667 common shares of the Company will be reserved for listing on the TSX Venture Exchange (the "TSX-V") as the maximum number of securities issuable to ArcelorMittal upon conversion for the principal of the Debenture (or approximately 10% of the current issued and outstanding common shares of the Company). Additional common shares of the Company will be reserved for listing on the TSX-V to satisfy the conversion related to the interest on the Debenture. The Debenture is subject to regulatory approval and the Debenture and Common Shares issuable upon conversion of the Debenture will be subject to applicable statutory hold periods from the date the Debenture is issued.

The Company expects that it will issue additional debentures to other parties on the same terms as above (together the "Debentures") bringing the intended gross proceeds of the debt offering of up to $9 million CDN. Proceeds from the issue and sale of the Debentures will be utilized for the Company's ongoing commitments in Brazil and Canada, as well as the acquisition of the minority interests in Brazore Barbados and Brazore Brazil as described above.

Upon completion of the Definitive Agreement, ArcelorMittal has agreed to invest additional capital into the Company by way of a non-brokered private placement of common shares (the "Share Placement") and intends to acquire up to 19.9% of the Company's common shares after taking into account potential shares issued upon the conversion of its Debentures and the Share Placement. It is anticipated that the gross proceeds of the proposed Share Placement will be up to $18 million CDN at $1.10 per common share (representing approximately 18,000,000 common shares) and will be utilized for funding the Company's proportionate share of development costs in connection with the port facility and for additional working capital.

The acquisition of the minority interests in Brazore Barbados and Brazore Brazil, the Debenture financing and the proposed Share Placement all remain subject to regulatory approval and all securities issued in connection with the proposed transaction will be subject to a hold period of not less than 4 months from the date of issue of the securities.

About ArcelorMittal

ArcelorMittal is the world's leading steel company, with over 320,000 employees in more than 60 countries.

ArcelorMittal is the leader in all major global steel markets, including automotive, construction, household appliances and packaging, with leading R&D and technology, as well as sizeable captive supplies of raw materials and outstanding distribution networks. With an industrial presence in over 20 countries spanning four continents, the Company covers all of the key steel markets, from emerging to mature.

Through its core values of sustainability, quality and leadership, ArcelorMittal commits to operating in a responsible way with respect to the health, safety and wellbeing of its employees, contractors and the communities in which it operates. It is also committed to the sustainable management of the environment and of finite resources. ArcelorMittal recognises that it has a significant responsibility to tackle the global climate change challenge: it takes a leading role in the industry's efforts to develop breakthrough steelmaking technologies and is actively researching and developing steel-based technologies and solutions that contribute to combat climate change.
In 2007 ArcelorMittal had revenues of 105.2 billion USD and crude steel production of 116 million tonnes, representing around 10 per cent of world steel output.

ArcelorMittal is listed on the stock exchanges of New York (MT), Amsterdam (MT), Paris (MTP), Brussels (MTBL), Luxembourg (MT) and on the Spanish stock exchanges of Barcelona, Bilbao, Madrid and Valencia (MTS).

For more information about ArcelorMittal visit: www.arcelormittal.com or to obtain a copy of the Early Warning Report filed by ArcelorMittal pursuant to applicable securities laws, please contact:

Haroon Hassan
General Manager, Corporate Communications
Head of Media Relations
7th Floor, Berkeley Square House
Berkeley Square
London, W1J 6DA
United Kingdom
Tel: +44 (0)20 3214 2847

About Adriana Resources Inc.

Adriana's goal is to become a fully integrated iron ore producer through strategic partnerships, acquisitions and development projects. The continued development of its iron ore port facility in Brazil, jointly owned by ArcelorMittal, will be a significant milestone in advancing that goal with Adriana having access to a minimum of 2 million tonnes of iron ore capacity that will grow as the Port develops in size. Adriana is committed to the acquisition of iron ore assets in South East Brazil that are strategically located and able to access the Port. The Company is continuing development of its 100% owned Lac Otelnuk, December Lake and Bedford iron properties in Quebec and Labrador & Newfoundland, respectively and actively pursuing iron ore acquisitions around the world and through its partnerships with ArcelorMittal, WorldLink Group and Athena. Adriana's management and technical team continue to review other opportunities to further enhance the Company's position as "The New Player in Iron Ore".

For more information, contact Robert Ferguson or Ali Sinawi at + 1 (604) 629-0250 or toll free at + 1 (877) 629-0150 or visit the Company's website at www.adrianaresources.com.

ON BEHALF OF ADRIANA RESOURCES INC.

"Michael J. Beley"
President

Certain information regarding the Company including management's assessment of future plans and operations, may constitute forward-looking statements under applicable securities laws and necessarily involve risks associated with mining exploration and development, volatility of prices, currency fluctuations, imprecision of resource estimates, environmental risks, access to labour and services, competition from other companies and ability to access sufficient capital. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
 
 

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