TORONTO, Nov. 9, 2016 /CNW/ - Melior Resources Inc.
("Melior" or the "Company") (TSXV-MLR) is pleased to announce that
it has reached agreement with Pala Investments Limited ("Pala") to
amend the terms of its August 2, 2015
loan facility with Pala (the "Pala Facility") and that it has
reached a settlement and revised payment schedule with Rothschild
in respect of Rothschild's 2006 claim against the predecessor to
the Company.
Amendment to Loan Facility
Pursuant to the terms of the agreement, Pala has agreed to make
available an additional US$300,000 to
the Company, which amount will be added to the currently
outstanding US$2.7 million principal
amount under the Pala Facility, for an aggregate outstanding
principal amount of US$3 million. The
Pala Facility will have a maturity date of October 31, 2022, bear interest at 10% per annum
and may not be prepaid prior to October 31,
2017 except upon completion of a Liquidity Event. On or
following October 31, 2017 the
principal amount outstanding plus all accrued interest may be
prepaid at the option of the Company without penalty or called by
Pala. In addition, if, at any time prior to October 31, 2017, the Company announces or
completes a change of control transaction or sale of 25% or more of
its interests or assets (each, a "Liquidity Event") relating to the
Goondicum ilmenite and apatite mining and processing facility and
resulting in proceeds of more than US$4
million, a mandatory prepayment of the Pala Facility will be
required and all principal and accrued interest shall become due
and payable including payment of a customary make whole amount (the
"Make Whole Amount") of up to US$2
million. The Make Whole Amount is restricted to the pool of
funds that consists of 70% of the amount by which the proceeds of
such Liquidity Event exceed US$4
million ("Liquidity Excess") with recourse limited to the
Liquidity Excess, if any, to a maximum of US$2 million. The proceeds of a Liquidity
Event shall include any amounts payable directly or indirectly to
Melior, its affiliates or its securityholders in connection with
the Liquidity Event.
The new proceeds of the Pala Facility will be used by Melior for
working capital purposes and for settlement of certain amounts owed
to Rothschild pursuant to the previously announced September 6, 2016 decision of the Court of Appeal
of Milan.
In addition, Pala has agreed to grant Melior a put option (the
"Put Option") in respect of the 47,272,727 Asian Mineral Resources
Limited ("AMR" and TSX-V: ASN) shares owned by Melior (the "AMR
Shares"). Under the terms of the Put Option, the put price
per AMR Share will be equal to the lesser of (i) CAD$0.024 and (ii) the 30-day VWAP of the AMR
Shares traded on the TSX Venture Exchange (the "TSXV") calculated
as of market close on the day prior to the day the AMR Put Option
is exercised by the Company less 10%. At AMR's current 30-day
VWAP the Put Option is valued at approximately CAD$1.134 million to Melior. The Put Option
may be exercised by Melior at any time following the closing of the
previously announced acquisition by AMR of Kasbah Resources Limited
(ASX: KAS) pursuant to an Australian scheme of arrangement, until
February 28, 2017. The exercise of
the Put Option remains subject to approval of the TSXV pursuant to
TSXV Policy 5.3 – Acquisitions and Dispositions of Non-Cash
Assets.
The entering into of the amendment to the Pala Facility and
grant of the Put Option constitute "related party transactions"
within the meaning of Multilateral Instrument 61-101 –
Protections of Minority Security Holders in Special
Transactions ("MI 61-101"). The Board of Directors of
Melior (the "Board"), acting in good faith, and the independent
members of the Board, acting in good faith, have determined that
the Company is in serious financial difficulty, that the Pala
Facility and Put Option are designed to improve the Company's
financial position and that the terms of the amended Pala Facility
and the Put Option are reasonable in the Company's
circumstances. As such, Melior intends to rely on the
exemption from the minority shareholder approval requirements of MI
61-101 contained in Section 5.7(1)(e) of MI 61-101 on the basis of
financial hardship.
In connection with the proposed amendment to the Pala Facility,
Melior has obtained written consent to the proposed amendment from
holders of more than 50% of the issued and outstanding common
shares of Melior that are not held (beneficially or of record) by
Pala.
Melior has received conditional approval from the TSXV in
respect the proposed amendment to the Pala Facility, subject to
receipt of satisfactory definitive loan documentation.
Rothschild Litigation
As previously announced, on September 6,
2016, the Company received a decision of the Court of Appeal
of Milan awarding damages against
Melior in the amount of €436,811.00 plus interest, being
€571,827 in the aggregate, which amount was immediately
payable. Following receipt of this decision Melior and
Rothschild engaged in settlement discussions, and as a result of
these discussions, Melior and Rothschild have agreed that a total
of €571,827 shall be paid by Melior in installment payments to be
made through June 30, 2017. The
initial instalment in the amount of €75,000 shall be paid no later
than November 16, 2016.
Strategy Implementation
The Company's key focus over the next six months is to bring in
an appropriate equity partner to its Goondicum Mine to add to the
operational, marketing and finance capability of the ownership
team. The titanium feedstock industry has continued to show
tangible signs of recovery with industry commentators predicting
further price gains in 2017. A transaction such as this, with the
right partner, will position the mine for an efficient and timely
restart. The project is currently on care and maintenance and
provides the opportunity for a low capital cost, speedy, restart of
a 375 tph processing facility to produce upwards of 175ktpa of
ilmenite.
The Company's unique Process Technology has demonstrated a novel
means, at benchtop level, of upgrading the TiO2 content of a range
of ilmenites and other ores, at temperatures significantly lower
than the conventional smelting process. The research and
development program over the next six months will endeavor to
confirm the likelihood that this technology can be commercially
scaled up.
Forward Looking Statements Disclaimer
Statements made in this news release may be forward-looking
and therefore subject to various risks and uncertainties. Such
statements can typically be identified by terminology such as
''may'', ''will'', ''could'', ''should'', ''expect'', ''plan'',
''anticipate'', ''believe'', ''intend'', ''possible'',
''continue'', "objective" or other similar expressions concerning
matters that are not historical facts. Certain material factors or
assumptions are applied in making forward-looking statements and
actual results may differ materially from those expressed or
implied in such statements. Melior does not undertake to update any
forward-looking statements; such statements speak only as at the
date made.
Going Concern Risk
As described in Melior's MD&A, the continuing operations
of the Company are dependent upon its ability to continue to raise
adequate financing, to commence profitable operations in the
future, and repay its liabilities arising from normal business
operations as they become due. There remains a significant risk
that the Company is unable to find alternative sources of financing
for on-going working capital requirements. These material
uncertainties cast significant doubt upon the Company's ability to
continue as a going concern.
Failure to obtain sufficient financing could result in a
delay or abandonment of the Goondicum Mine and could force the
Company into reorganization, bankruptcy or insolvency proceedings.
Additional financing may not be available when needed or, if
available, the terms of such financing might not be favourable to
the Company and might involve substantial dilution to existing
shareholders. Failure to raise capital when needed would have a
material adverse effect on the Company's ability to pursue its
business strategy, and accordingly could negatively impact the
Company's business, financial condition and results of
operations.
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.
SOURCE Melior Resources Inc.