TIDMAVM
RNS Number : 6587C
Avocet Mining PLC
18 June 2019
For Immediate Release
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT
JURISDICTION
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
Disposal of interest in Tri-K project
Avocet Mining Plc ("Avocet" or the "Company") announces that,
pursuant to an agreement entered into today with its joint venture
partner Managold Ltd ("Managold"), a subsidiary of Managem SA, it
has sold its remaining interests in the Tri-K gold project in
Guinea (the "Tri-K Project") to Managold for an aggregate
consideration of USD 21 million (the "Disposal"). Signing and
completion of the Disposal took place simultaneously today.
The Disposal is part of the restructuring of Avocet's overdue
loans to its secured creditor Manchester Securities Corp.
("Elliott"). These loans total around USD 32 million, and Elliott
has released the Company from all amounts outstanding thereunder
against, amongst other things, the payment of the majority of the
proceeds of the Disposal.
This payment, together with certain other third party debts,
leaves the Company a minimal residual cash sum while it considers
its future strategy.
Introduction
Discussions have been ongoing between the Company and Elliott
regarding the restructuring of its overdue loans to Elliott which
total USD 32.2 million to date.
In this context, the Company has sold its assets in Burkina
Faso, including the Inata gold mine to the Balaji Group of
companies ("Balaji") in February 2018. Further, with a view to
minimising its costs and streamlining its remaining
responsibilities, activities and group structure, the Company sold
one of its subsidiary companies, Wega Mining AS, to Natholmen AS in
March 2018.
The disposal by Avocet of its interests in the Tri-K Project and
its related assets is also part of this restructuring effort.
Transaction Details
The transaction comprises a sale by the Company to Managold of
the 30 per cent stake it holds in the issued share capital of
Manacet SA ("Manacet") and the assignment by Avocet to Managold of
all the intercompany receivables owed to the Company by Manacet's
subsidiary Société des Mines de Mandiana for an aggregate
consideration of USD 21 million pursuant to a shares and loans
purchase agreement entered into today (the "Agreement").
The Agreement provides for the termination of certain other
agreements and arrangements relating to the Tri-K Project, as well
as general settlement of all matters between Avocet and Managold in
relation to Manacet and the Tri-K Project.
Use of Proceeds
Given the Company's current circumstances and in order to enable
the Company to resolve its affairs, Elliott agreed, subject to the
settlement of Avocet's overdue loans, to the Disposal and to the
release of its rights under the various facility agreements.
Elliott has released Avocet from all amounts outstanding (and
all other obligations) under these agreements against the payment
of the majority of the proceeds of the Disposal, the assignment of
all of Avocet's rights under the Agreement and the assignment of
Avocet's rights under a loan agreement relating to the February
2018 transaction with Balaji.
Avocet has applied part of the remaining proceeds received by it
under the Agreement to settle certain other outstanding third party
debts of the Company, leaving the Company with a minimal residual
cash sum.
Approval of the Transaction
Avocet's Standard Listing does not require it to comply with the
provisions of Listing Rule 10; this rule sets out requirements for
shareholders to be notified of certain transactions and to have the
opportunity to vote on proposed significant transactions.
Before entering into the Agreement, Avocet's board has made a
thorough assessment of the Disposal, and of the settlement with
Elliott. It has sought and obtained extensive advice from its
financial and legal advisors, and has carefully considered the
Disposal and the settlement with Elliott in light of the Company's
current circumstances. Relevant factors in this respect include:
the Company's obligations under the various facility agreements
with Elliott; the existence of other outstanding third party debts;
its ongoing holding costs; the contribution the Company is required
to make to the Tri-K Project in order to avoid significant
dilution; and the absence of any third party interest in the sale
of the Company's stake in the Tri-K Project - all against the
background of its weak liquidity position, having exhausted all
sources of funding.
In this context, the board has obtained and relied upon an
independent fairness opinion and presentation (the "Fairness
Opinion and Presentation") which states, inter alia, that - based
upon and subject to the factors, qualifications and assumptions set
forth in the Fairness Opinion and Presentation - the Disposal is
fair from a financial point of view.
Considering the above, the board believes that the Disposal and
the settlement with Elliott are not unreasonable and do not
disadvantage any other stakeholder of the Company given the high
level of debt in the Company, enabling the Company to resolve its
affairs. It has therefore entered into the Agreement, and has
settled all of the sums owed by it to Elliott under the overdue
loans as described above.
Next Steps
Avocet's interest in the Tri-K Project was its last significant
equity interest, leaving Avocet with no significant subsidiaries or
other equity investments, and, following payment by Avocet of the
various amounts referred to above, a minimal residual cash sum.
The board of the Company is currently considering the future
strategy of Avocet. Options being considered include entering into
new investments or other commercial arrangements or the orderly
winding up of the Company. A further announcement will be made in
due course.
- END -
FOR FURTHER INFORMATION PLEASE CONTACT
Avocet Mining PLC Blytheweigh Financial PR
Boudewijn Wentink, CEO Tim Blythe
Yolanda Bolleurs, CFO Camilla Horsfall
Megan Ray
+44 203 709 2570 +44 207 138 3204
NOTES TO EDITORS
Avocet Mining PLC ("Avocet" or the "Company") is a gold mining
and exploration company listed on the London Stock Exchange
(ticker: AVM.L) and the Oslo Børs (ticker: AVM.OL).
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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