9th Feb 2017 14:44
LONDON (Alliance News) - Xtract Resources PLC on Thursday said it has reached a settlement regarding the dispute with Auroch Exploration Pty Ltd, resulting in the London-listed miner issuing loan notes.
Xtract shares were up 40% to 0.021 pence per share on Thursday afternoon.
Xtract had been trying to strike a deal to settle the USD1.7 million it owed to Auroch following the acquisition of the Manica gold project. Xtract struck a deal in June last year to clear the outstanding balance in August, but what was intending to use funds owed by its joint venture partner.
Since, discussions have been ongoing about how to settle the outstanding payment. Xtract has now agreed to settle USD748,136 by issuing a convertible loan note with 10% interest per year that will be due before the end of 2017.
Notably, if Xtract raises any further funds, 15% of any net proceeds will have to go toward repaying those loan notes. The notes can be converted into shares at a 15% discount to the volume weighted average price of Xtract shares over the 10 business days prior to being exercised, subject to a floor price of 0.012 pence.
"In the event of a material breach of the terms of convertible loan note agreement by the company which has not been remedied by the company to the Noteholder's satisfaction, acting reasonably, the conversion discount will increase to 30%," said Xtract.
Auroch has agreed that, unless Xtract defaults, it will not convert loan notes that will require Xtract to enlarge its issued share capital by more than 10%.
The other USD1 million balance owed to Auroch will be structured into a loan agreement, also carrying an annual interest rate of 10% and expiring at the end of 2017.
"In addition, it has been agreed that the company will endeavour to obtain relevant shareholder authorities on or before June 30, 2017 to authorise the company to replace the loan agreement with a convertible loan note on substantially the same terms as the convertible loan notes," said Xtract.
If shareholder approval is not secured, then an accelerated interest rate of 30% per annum will accrue going forward on any outstanding balance.
Auroch has also been issued with warrants over 50,000 shares exercisable at 0.02 pence each, expiring on December 21, 2017.
As security for the loan, Xtract has provided a royalty of 3% of gross revenue from Manica during commercial operations. Any royalty payments made will reduce the outstanding balance on the loan.
"I am pleased that this outstanding matter has been satisfactorily resolved. This represents another step forward for the Manica Project and brings certainty where previously unresolved issues remained between Xtract and Auroch. I look forward to delivering the definitive feasibility study before month end," said Chairman Colin Bird.
By Joshua Warner; [email protected]; @JoshAlliance
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