TORONTO, Dec. 23 /CNW/ - Anaconda Mining Inc. ("Anaconda") (TSX: ANX) is pleased to announce that it plans to do a rights offering to raise funds for working capital purposes following completion of the previously announced arrangement agreement ("Arrangement") with New Island Resources Inc. ("New Island"). On December 10, 2010 Anaconda and New Island announced they had entered into the Arrangement in connection with their previously announced transaction, whereby Anaconda will acquire New Island's interest in the Pine Cove Mine and Mill in exchange for common shares in Anaconda ("the Anaconda New Shares") on the basis of a share exchange ratio of 0.45 of an Anaconda share for each one common share of New Island. As part of the Arrangement, all former New Island shareholders who tendered their shares to Anaconda on the basis of a share exchange ratio of 0.42 of an Anaconda share for each one common share of New Island, pursuant to Anaconda's takeover bid offer in the summer of 2010, will receive an additional 0.03 of a New Anaconda Share for each one New Island share they tendered. Following the completion of the Arrangement, the New Anaconda Shares will be distributed directly to all New Island shareholders ("the Anaconda New Shareholders").

The Arrangement is subject to New Island obtaining the required shareholder approval at a special meeting of New Island shareholders ("Special Meeting") and to the receipt of court and all necessary regulatory approvals. New Island will hold the Special Meeting to approve the Arrangement on January 11, 2011. The record date for the Special Meeting was fixed as December 17, 2010. The Arrangement is scheduled to close shortly thereafter and is subject to attaining court approval. (For more details concerning the Arrangement see Anaconda press release dated December 10, 2010. "http://www.anacondamining.com/pdf/ANX_Dec_10_2010.pdf" www.anacondamining.com/pdf/ANX_Dec_10_2010.pdf )

As soon as practicable, following completion of the Arrangement, Anaconda will commence a rights offering ("the Anaconda Rights Offering") to its shareholders. For greater clarity, the Anaconda Rights Offering will include the Anaconda New Shareholders who received shares pursuant to the Arrangement. Anaconda intends to issue rights to purchase shares in an amount up to 25% of its capitalization at the time at a price not to exceed $0.10 per share. Following completion of the Arrangement Anaconda expects to have approximately 126,000,000 shares outstanding.

More detailed terms of the Anaconda Rights Offering cannot be determined until such time as a circular has been filed and approved by the TSX which can only occur following completion of the Arrangement and terms will be dependent upon market conditions at that time; be subject to Anaconda abiding by all requisite rules and regulations governing the issuance of rights; and be subject to the approval by the TSX.

A portion of the Anaconda Rights Offering will be backstopped by a syndicate that will include Jones Gable & Company Ltd. ("Jones Gable"). Final and definitive terms of the back stop are under discussion and not yet determined but the size of the backstop is expected to be approximately a minimum of $1.5 million. Given that the timing and approval of the Anaconda Rights Offering is constrained by the closing of the Arrangement, it is, therefore, expected that the Anaconda Rights Offering will not be completed until mid to end of February. To bridge the need for working capital between now and the expected closing of the Anaconda Rights Offering, certain candidate members of the backstop syndicate, including Jones Gable, have advanced Anaconda funds in the form of a short term promissory note and may continue to do so if and when needed prior to completion of the Anaconda Rights Offering.

Anaconda also announces today that, on Tuesday December 21, 2010, it entered into an agreement ("the Settlement Agreement") with New Island with respect to certain matters related to New Island's AGM held on Wednesday December 22, 2010; and with respect to certain matters related to the Special Meeting to be held on January 11 2011 for the purpose of approving the Arrangement. The Settlement Agreement provides, amongst other things, for a specific governance plan acceptable to Anaconda strictly limiting business activities and expenditures by New Island management and the board of directors, from signing and up to the Special Meeting on January 11, 2011, given Anaconda owns approximately 49% of New Island and is the largest shareholder. The Settlement Agreement also provides for an orderly and expeditious transition of the New Island board of directors in favour of a slate acceptable to Anaconda if the Special Meeting does not proceed for any reason on January 11, 2011; or if the necessary shareholder approvals are not obtained at the Special Meeting or subsequently from the court. However, it is important to note that both parties fully expect that the Arrangement will be completed as planned shortly after the January 11, 2011 Special Meeting, and both parties mutually agree to work diligently, using best efforts to complete the Arrangement transaction.

About Anaconda Mining Inc.

Anaconda is a Toronto, Canada-based mining and exploration company focused on operating the Pine Cove gold mine located near Baie Verte in Newfoundland, Canada and, with its joint venture partner, Inversiones SBX Limitada, advancing the development and exploration of its iron ore portfolio in Chile. Additional information concerning Anaconda may be obtained on Anaconda's website at: www.anacondamining.com or from the System for Electronic Document Analysis and Retrieval ("SEDAR") website at: www.sedar.com under Anaconda's profile.

About New Island Resources Inc.

New Island is a diversified junior exploration company holding gold and base metal properties in the Province of Newfoundland and Labrador. New Island has entered into an agreement for the sale of its interest in the gold mine and mill project at Pine Cove in central Newfoundland. Additional information concerning this sale and New Island may be obtained on New Island's website at: www.newislandresources.com or from the SEDAR website at: www.sedar.com under New Island's profile.

Cautionary Notice: This news release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, information concerning the proposed arrangement between Anaconda and New Island and matters relating thereto. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects", or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", 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 information is based on the opinions and estimates of management at the date the information is made, and is based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Assumptions upon which such forward-looking information is based include, without limitation, that the shareholders of New Island will approve the transaction, that all required third party regulatory and governmental approvals to the transaction will be obtained and all other conditions to completion of the transaction will be satisfied or waived. Many of these assumptions are based on factors and events that are not within the control of Anaconda or New Island and there is no assurance they will prove to be correct. Factors that could cause actual results to vary materially from results anticipated by such forward-looking information include changes in market conditions, variations in ore grade or recovery rates, fluctuating metal prices, changes in project parameters, the possibility of project cost overruns or unanticipated costs and expenses, labour disputes and other risks of the mining industry, failure of plant, equipment or processes to operate as anticipated, as well as those risk factors discussed in Anaconda's Annual Information Form for the year ended December 31, 2009 available at www.sedar.com and New Island's Management Information Circular, a copy of which will be available on www.sedar.com. Although Anaconda and New Island have attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Anaconda and New Island undertake no obligation to update forward- looking information if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking information. This news release and the information contained herein does not constitute an offer of securities for sale in the United States and securities may not be offered or sold in the United States absent registration or exemption from registration.

"Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release".

For further information:

Anaconda Mining Inc.
Dustin Angelo
President and CEO
Tel: (647) 260-1248
Email: dangelo@anacondamining.com
Website: www.anacondamining.com

New Island Resources Inc.
Harold Wareham
President
Tel: (709) 576-7711
Email: info@newislandresources.com
Website: www.newislandresources.com