NEX: CCU.H

    DENVER, Dec. 23 /CNW/ - Constellation Copper Corporation ("Constellation"
or the "Company") (NEX: CCU.H) today announced that it has filed an assignment
in bankruptcy under the Bankruptcy and Insolvency Act (Canada).
    The Lisbon Valley mine was originally financed with a $30.0 million
collateralized loan package from Investec Bank (UK) Limited ("Investec") and a
$3.0 million subordinated loan from Sempra Metals & Concentrates Corp.
("Sempra"). The Investec financing facility was amended in February 2006 to
extend the facility by $10.0 million which was used to pay construction costs
and to repay the Sempra loan. In connection with the increased Investec debt
facility, the Company agreed to sell forward copper in commodity swap
transaction arrangements (the "Hedging Arrangements") with Investec. The
Investec financing facility was further amended in March 2007 for an
additional $1.5 million.
    On March 15, 2007, the Company repaid the outstanding Investec loan of
$30,685,000 with a portion of the proceeds of the sale of Cdn.$69 million of
5.5% convertible unsecured senior debentures due March 31, 2012 (the
"Debentures"). The Company was unable to retire the remaining hedges at that
time and continued to service that obligation to Investec from production
revenues. The hedges were originally struck at an average copper price of
$1.86 per pound. Since that time all of the remaining hedges have been closed
out at higher prevailing market prices, and the Company owes Investec $9.7
million.
    Interest on the Debentures is payable semi-annually on March 31 and
September 30. The Company did not pay the interest on the Debentures when due
on March 31, 2008 and September 30, 2008. Following the prescribed cure period
ended April 30, 2008, the non-payment of interest in March 2008 was considered
an event of default, requiring the Company to accrete the Debentures up to
their Cdn.$69.0 million face value, which is payable on demand.
    In February 2008, the Company finalized an amendment to the Hedging
Arrangement. Under the terms of the amendment which have previously been
disclosed, the Company agreed to allow Investec to sweep the Lisbon Valley
bank accounts for cash in excess of a prescribed minimum balance on each
settlement date after February 2008, until all amounts due have been paid.
Investec has been sweeping the amounts without leaving a balance since
October, 2008. The Company has been negotiating with Investec to have amounts
released that would permit the Company to continue operations. Investec has
released certain amounts for specific necessary operating expenditures at the
Lisbon Valley Mine but has not released sufficient funds for the Company and
its subsidiaries to continue corporate operations. This led to the inability
to pay the property payment due on the Terrazas zinc/copper project in
Chihuahua, Mexico during October such that the Company's interest in Terrazas
had to be relinquished. Further, the Company was unable to make required
property payments on its San Javier copper project in Sonora, Mexico during
December, and those rights are also in default. Current copper and zinc prices
have made both projects much less valuable than they had been earlier in the
year.
    The Company has been working to reach an agreement with Jaguar Financial
Corporation and Glencore International AG pursuant to the letter of intent
announced on September 3, 2008 without success. Since announcing that the
Company was seeking new financing or a sale of properties in September 2007,
35 mining companies and financial firms have completed confidentiality
agreements and have conducted due diligence on the Company's various assets.
Detailed negotiations were conducted with several firms, but only a few went
past the confidentiality agreement and initial due diligence stage.
    The Company is unable to meet its ongoing obligations and expects that no
value will remain available to shareholders. The Board of Directors of
Constellation determined it had no choice but to file an assignment in
bankruptcy and has appointed Deloitte & Touche Inc. to act as Trustee in
Bankruptcy. All of the board members and officers of Constellation have
tendered their resignations effective today.
    As first announced on November 20, 2008, the Company was unable to file
its unaudited financial statements and related Management Discussion &
Analysis for the third quarter ended September 30, 2008 by the required filing
date under applicable Canadian securities laws. The Company no longer expects
to file such documents on or before January 14, 2009. The Company has
therefore asked the securities regulatory authorities in each of the Provinces
of Canada to replace the management cease trade order covering the former
Chief Executive Officer and Chief Financial Officer of the Company with an
issuer cease trade order.
    Pat James, Chairman, President and CEO, stated "The Company has been
actively pursuing its strategic alternatives, including various near term
financing alternatives, such as bank financing, equity investment, mergers,
and sale of certain assets or sale of the entire Company as first announced in
September, 2007. Unfortunately, we have been unsuccessful in finding a
solution to the Company's cash liquidity problems. The Board and management
would like to acknowledge the outstanding efforts of the Company's employees
during the exploration and development of its mineral properties, the
operation of the Lisbon Valley mine and the recent difficulties experienced by
the Company. We would also like to thank the vendors and professional service
providers who have supported our efforts in this difficult time."

    This press release contains certain forward-looking statements. In
certain cases, forward-looking statements can be identified by the use of
words such as "plans", "expects" or "does not anticipate", or "believes", or
variations of such words and phrases or statements that certain actions,
events or results "may", "could", "would", "might" or "will be taken", "occur"
or "be achieved". Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by the
forward-looking statements. Such factors include, among others, risks related
to changes in commodity and power prices, changes in interest and currency
exchange rates, inaccurate geological and metallurgical assumptions (including
with respect to the size, grade and recoverability of mineral reserves and
resources), unanticipated operational difficulties (including failure of
plant, equipment or processes to operate in accordance with specifications,
cost escalation, unavailability of materials and equipment, delays in the
receipt of government approvals, industrial disturbances or other job action,
and unanticipated events related to health, safety and environmental matters),
political risk, social unrest, and changes in general economic conditions or
conditions in the financial markets. Although the Company has attempted to
identify important factors that could cause actual actions, events or results
to differ materially from those described in forward-looking statements, there
may be other factors that cause actions, events or results to differ from
those anticipated, estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue reliance on
forward-looking statements.

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