Pacific Rim Mining Divests Denton-Rawhide

VANCOUVER - Pacific Rim Mining Corp. reported that it has accepted an offer from its Denton-Rawhide joint venture partner Kennecott Rawhide Mining Company to purchase the assets the Company holds through its 49% interest in the joint venture. Total compensation for these assets includes US $3.1 million plus the free cash flow from 49% of all gold and silver production from the Denton-Rawhide operation through to December 31, 2008.
The Company's decision to monetize its interest in Denton-Rawhide now is based on a number of pertinent factors including:
1) its revised outlook for the viability, timing and value of the Denton-Rawhide landfill agreement;
2) its forecast for continued future decreases in gold and silver production from the operation; and
3) its focus on protecting its primary asset, the El Dorado gold deposit, by bolstering its balance sheet in a non-dilutive manner.
"The sale of our Denton-Rawhide interest strengthens our ability to protect our cornerstone El Dorado gold project through the current global economic crisis," says Tom Shrake, President and CEO. "El Dorado has significant potential value, which will be specified in the feasibility study scheduled for completion in late 2008. Our prime directive at present is to preserve our shareholders' interest in this project and resolve its permitting issue, which may include our pursuit of legal recourse under El Salvadoran law and/or CAFTA, so that its true value can be recognized by the market."
The Rawhide JV has extended the closing date of the Denton-Rawhide Purchase and Sale Agreement with Nevada Resource and Recovery Group ("NRRG") by one year to October 29, 2009 at the request of NRRG. Pacific Rim has significant concerns about the economics of the landfill business proposition and its potential viability, as according to NRRG, "Much has changed in the waste area over the course of the past few years, including existing and emerging technologies for waste disposal and incineration, attitudes and mandates for aggressive community recycling measures, and of course, unprecedented economic pressures." The Company believes the value of this proposition has been greatly diminished and that it is realizing fair value for this asset given the risks still involved in financing and starting the landfill business at Denton-Rawhide.
Gold production at Denton-Rawhide has been on a steady decline since 2003 when active mining ceased and residual leaching commenced. The Company's share of total mine operating income was US $1.6 million dollars in the fiscal year ended April 30, 2008, having decreased from US $2.8 million and US $3.5 million in each of its respective previous fiscal years. Despite recent short term improvements in gold production, which the Company will be able to participate in through the remainder of 2008, this downward trend in metal production, exacerbated by recent declines in the gold price, is predicted to continue as would the future mine operating income the Company would have expected to realize.
The company's address is #410 - 625 Howe Street, Vancouver, BC, Canada V6C 2T6.