MONTREAL,
March 14, 2014 /CNW Telbec/ - Maudore
Minerals Ltd. ("Maudore" or the "Company") - (TSXV:
MAO) (OTCBB: MAOMF) (FWB: M6L) - announces that it has reached an
agreement with Cyrus Capital Partners, in its capacity as a manager
to FBC Holdings S.à.r.l ("FBC"), for additional funding to
be made available by FBC to Maudore and to its wholly-owned
subsidiary Aurbec Mines Inc. ("Aurbec").
Maudore and Aurbec had earlier reached
agreements with FBC and with their other major creditors (the
"Other Creditors") regarding the consensual restructuring of
their debts. However, it became necessary to revise the terms of
this consensual restructuring and to discontinue Maudore's
associated rights offering mainly as a consequence of the Company
having projected an increase in the time and development costs
required for new stoping at the Sleeping Giant mine, elements that
were not reflected in its initial payment schedules. The
primary driver for this change was the positive drill results
obtained from ongoing underground diamond drilling being
conducted. The Company has successfully achieved its initial
drilling plan goals and exceeded new ounce growth
targets. However, the majority of these new ounces were
revealed to be proportionally in the deeper levels of the
mine. As a consequence, additional mine development and
extended ramp up time is needed for these new stoping areas to
reach positive cash flows, resulting in a significant change to the
overall financing needs of the Company in order to bridge its
operations to that point.
The Company continues to work towards a revised
consensual restructuring of its debts (the "Consensual
Restructuring") in order to arrive at a sustainable financing
plan for developing the full potential of the Sleeping Giant
mine. As an important first step in this regard, the Company
has reached an agreement with FBC (the "FBC Agreement")
which provides it with access to additional funding to be applied
towards this goal.
The specific terms of the FBC Agreement are as
follows:
Immediate Funding
Upon the execution of definitive documentation
by the parties, FBC will immediately advance to Aurbec the sum of
$4 million in the form of a senior
secured loan (the "Senior Secured Loan"), with the funds to
be used by Aurbec for general corporate purposes until such time
that a meeting of the shareholders of Maudore can be convened in
order to obtain the approval of the shareholders other than FBC
(the "Minority Shareholders") to the overall terms of the
FBC Agreement as discussed below. The Senior Secured Loan will bear
interest at the rate of 15% per annum and will be secured by a
first charge on all assets of Aurbec (subject to the prior charge
on the Vezza property in favour of Entrepreneur Minier Promec Inc.
and Gestion Abitibi Inc.) as well as a secured guarantee provided
by Maudore (the "Senior Security"). Aurbec will pay a fee of
5% on any undrawn amounts.
FBC will also continue to allow Maudore to draw
on the balance remaining of the original amount of approximately
$3.3 million held in the interest
escrow account established pursuant to the existing $22 million secured credit facility granted to
Maudore by FBC (the "Credit Facility"). These funds will be
used for general corporate purposes, subject to the prior approval
of FBC. FBC has been allowing Maudore to access these funds
for working capital purposes since the time that the Company
discontinued its rights offering.
Should the Minority Shareholders not approve the
terms of the FBC Agreement, this would constitute a default under
the Senior Secured Loan, rendering it immediately repayable to FBC,
and would similarly create a default under the Credit Facility.
Other Features Subject to Shareholder
Approval
Upon the approval of the Minority Shareholders
of the terms of the FBC Agreement as discussed below, the following
additional elements of the FBC Agreement will be implemented:
- FBC will pay to Aurbec the sum of $4
million, which sum will be applied by Aurbec to the
repayment of the then outstanding balance of the Senior Secured
Loan described above, with the remaining balance available to be
used for general corporate purposes. In exchange for this
$4 million payment, (i) Aurbec will
issue to FBC such number of common shares in its share capital as
will result in FBC holding a 49.9% equity interest in Aurbec (with
Maudore retaining a 50.1% equity interest) and (ii) Aurbec will
grant to FBC a royalty claim (the "Royalty Claim"). Under
the terms of the Royalty Claim, Aurbec will be required to pay to
FBC, within one year, the sum of $4
million plus interest at the rate of 15% per
annum. Repayment of the Royalty Claim will be made by Aurbec
through a combination of the following sources of cash: (A) 1% of
any gold sales generated by Aurbec and (B) any cash balances in
excess of $1 million (which excesses
will be deposited into a blocked account in favour of FBC and be
balanced on a bi-weekly basis). Moreover, in the event of a change
of control of Maudore or Aurbec (other than in favour of FBC), the
Royalty Claim will become immediately repayable at the option of
FBC for an amount equal to 101% of the amount otherwise payable
thereunder at such time. The obligations of Aurbec under the
Royalty Claim will be guaranteed by Maudore and secured against the
assets of Maudore and Aurbec.
- FBC will make available to Aurbec the sum of $2 million in the form of a senior secured loan,
with the funds to be used by Aurbec for general corporate purposes,
subject to the prior approval of FBC. This senior secured loan
will bear interest at the rate of 15% per annum and will be secured
by the Senior Security. Aurbec will pay a fee of 5% on any
undrawn amounts.
- FBC will provide funding sufficient to satisfy Aurbec's new
environmental bonding requirements in 2014 of approximately
$0.9 million.
- The approximately $2.2 million in
interest currently outstanding under the Credit Facility will be
converted into principal under the Credit Facility.
- Maudore will be permitted to satisfy the ongoing interest owing
on the Credit Facility for 2014 either by making cash payments or
by converting such interest into principal under the Credit
Facility.
- FBC will convert a minimum of $2
million and a maximum of $4
million (the exact amount to be determined by FBC at its
option) of outstanding principal owing under the Credit Facility,
or of other debt owing to it, into common shares of Maudore
("Common Shares") at a conversion price of $0.09 per Common Share, representing a minimum of
22,222,222 and a maximum of 44,444,444 Common Shares.
- Maudore will undertake not to issue any additional Common
Shares without the approval of FBC prior to the implementation of
the Consensual Restructuring.
- In consideration of this restructuring, Maudore will issue to
FBC an aggregate of 15.35 million Common Shares.
The Boards of Directors of Maudore and of Aurbec
have received an opinion from Clarus Securities Inc. regarding the
terms and conditions of the FBC Agreement, stating that the FBC
Agreement is fair to Maudore and to Aurbec from a financial point
of view.
Discussions continue with the Other Creditors
regarding the revisions to be made to the terms of the consensual
restructuring initially entered into with them. Agreements
have been reached with the Other Creditors of Aurbec which provide
that an aggregate of approximately $3.3
million of debt will be repaid in monthly instalments of
approximately $85,000, with a final
balloon payment to be made in March
2015. Further announcements in this regard will be made as
warranted.
The implementation of the FBC Agreement remains
subject to the execution of formal documentation, the receipt of
all requisite regulatory approvals, including the approval of the
TSX Venture Exchange, and, except as stated above, the approval of
the Minority Shareholders. Moreover, any further agreements
that Maudore or Aurbec may enter into with the Other Creditors
regarding the restructuring of their debt may be subject to similar
conditions. Further information regarding these matters will
be contained in a management proxy circular which will be mailed to
shareholders in due course in connection with the meeting which
will be called by the Company in order to seek their approval of
the foregoing.
About Maudore
Maudore is a Quebec-based junior gold company in
production, with mining and milling operations as well as more than
22 exploration projects. Five of these projects are at an advanced
stage of development with reported current and historical resources
and mining. Currently, gold production is ramping up at the
Sleeping Giant mine. The Company's projects span some 120 km,
east-west, of the underexplored Northern Volcanic Zone of the
Abitibi Greenstone Belt and cover a total area of 1,570 km², with
the Sleeping Giant Processing Facility within trucking distance of
key development projects.
Cautionary Statement Regarding
Forward-Looking Statements
This release and other documents filed by the
Company contain forward-looking statements. All statements that are
not clearly historical in nature or that necessarily depend on
future events are forward-looking, and the words "intend",
"anticipate", "believe", "expect", "estimate", "plan" and similar
expressions are generally intended to identify forward-looking
statements. These forward-looking statements include, without
limitation, performance and achievements of the Company, business
and financing plans, business trends and future operating revenues.
These statements are inherently uncertain and actual achievements
of the Company or other future events or conditions may differ
materially from those reflected in the forward-looking statements
due to a variety of risks, uncertainties and other factors,
including, without limitation, financial related risks, unstable
gold and metal prices, operational risks including those related to
title, significant uncertainty related to inferred mineral
resources, operational hazards, unexpected geological situations,
unfavourable mining conditions, changing regulations and
governmental policies, failure to obtain required permits and
approvals from government authorities, failure to obtain any
required approvals of the regulatory authorities or from
shareholders or creditors, failure to obtain any required
financing, increased competition from other companies many of which
have greater financial resources, dependence on key personnel and
environmental risks and the other risks described in the Company's
continuous disclosure documents.
Neither TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in policies
of the TSX Venture Exchange) accepts responsibility for the
adequacy or accuracy of this release.
SOURCE Maudore Minerals Ltd.