NSW base metals miner Aurelia Metals has seen off an attempt by Swiss commodities giant Glencore that could have seen it forced into administration, reaching a settlement that will give it another two years of breathing space to tackle its debt.
Shares in the Orange-based Aurelia more than doubled yesterday on the back of the news that litigation between it and Glencore had been settled, ending a five-month stand-off that had threatened the companys existence.
Under the agreement, all existing debt repayments from Aurelia to Glencore have been deferred for at least two years. Interest has also been suspended for two years, while Glencore has also agreed to provide $21.5m in new funding.
In return, among other conditions, Aurelia and Glencore will agree a 12-month business plan for Aurelias Hera mine in NSW, and Aurelia will not draw down the alternative financing facilities it agreed back in September with significant shareholder Pacific Road.
Back in June, Glencore hit Aurelia with a notice asserting that the small miner had defaulted on its $120m in borrowings from Glencore. Aurelia swiftly rejected the validity of the default notice and countered by issuing Glencore with a notice converting debt worth $50m worth into Aurelia shares at a price well in excess of its levels at that time.
The pair headed to court and a decision had been looming before yesterdays breakthrough.
Aurelia chief executive Rimar Kairaitis said the settlement would allow the miner to get on with the task of improving the performance of Hera.
Aurelia welcomes the agreement, as it sets aside the considerable legal and financial uncertainty around the company while providing a net $21.5m funding together with a substantial deferral of existing debt repayments and interest, Mr Kairaitis said.
Aurelia can now proceed with the rectification and optimisation of the Hera project and position the business for growth.
News of the settlement came as Glencore announced it would invest about $150m into its Cobar copper mine in NSW.
It said the investment would support a further 16 years of operation at Cobar, which was up for sale last month as it attempted to address concerns about its debt position.
Glencore said the Cobar investment could create up to 40 new jobs.
(c) 2015 CNEgypt. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info)., source Middle East & North African Newspapers