Palladon Ventures Ltd. ("Palladon" or the "Company") (TSX VENTURE:
PLL) (FRANKFURT: PV-1) announced today that the Company has
executed an agreement (the "Extension Agreement") with Luxor
Capital Group, LP ("Luxor"), to extend the term of the Company's
two loans payable to Luxor in the current aggregate amount
(including principal and accrued interest) of approximately US$37
million (the "Luxor Loans"), which loans were otherwise payable in
full on June 26, 2009. The Company is currently seeking TSX Venture
Exchange approval of the Extension Agreement, the primary terms of
which are described below.
The Extension Agreement anticipates two extension periods. The
first extension period is to October 15, 2009 ("First Extension
Period"), while a second extension to December 31, 2010 ("Second
Extension Period") is contingent on the Company raising funds (the
"Interim Financing") of no less than US$5,000,000 during the First
Extension Period. The Company will pay-in-kind interest accruing
during the extension periods at 12.5% per annum, thus preserving
cash and providing Palladon flexibility to fund operations. In
connection with the First Extension Period, the Company has agreed
to pay additional interest of US$500,000, which will be added to
the principal amount of the Luxor Term Loan, and would be payable
in cash out of the Interim Financing.
During the First Extension Period, the Company will endeavor to
complete the Interim Financing to fund operations, advance
feasibility studies for iron concentrate and alternate iron
products (DRI, pig iron or iron nuggets), and potentially repay a
portion or all of the Luxor Loans. The Company will attempt to
raise a minimum of US$5 million in the Interim Financing, which is
anticipated to fully fund operations through the end of 2010.
Palladon will also continue discussions with strategic and
financial investors regarding larger funding options to refinance
and repay the Luxor Loans, as well as to advance its concentrate
and alternate iron production projects.
If Palladon raises a minimum of US$5 million of equity capital
prior to October 15, 2009 and if certain other conditions have been
met, then the due date on the Luxor Loans will be extended, without
further action by any party, to December 31, 2010. Upon the closing
of the Interim Financing and commencement of the Second Extension
Period, Palladon will be obligated to pay additional interest to
Luxor in the amount of US$1,750,000 (assuming the Luxor Loans have
not been paid in full), payable by the issuance to Luxor of shares
of Palladon's common stock at the per share price at which
Palladon's common stock is issued or deemed to have been issued in
the Interim Financing, provided that in no event shall any such
shares issued exceed 5% of Palladon's total shares outstanding
after giving effect for the Interim Financing.
Additionally, during the Second Extension Period, if the Luxor
Loans continue to be outstanding, Palladon will issue to Luxor on
each of December 31, 2009, March 31, 2010, June 30, 2010 and
September 30, 2010 common shares in an amount equal to a maximum of
3% of the then total outstanding shares of Palladon's common stock.
If the Company repays the Luxor Loans prior to the vesting dates,
any future stock grant obligations would terminate.
Luxor has also agreed that after sixty five percent (65%) of the
total amounts payable on the Luxor Loans has been paid in cash, at
the Company's option, the balance of the Luxor Loans can be
converted into Palladon common equity at the most recent share
price used to refinance the Luxor Loans, provided that the amount
raised in such financing is at least US$10 million and other
conditions have been met. Other terms and conditions are included
in the Extension Agreement.
Commenting on the Agreement, CEO John Cutler stated, "We are
very pleased to have reached this Agreement with Luxor. They
understand the potential for this project and have demonstrated a
commitment to work with the Company to advance its efforts. The
first extension will allow SRK Consulting (U.S.), Inc. ("SRK") to
continue its work which will allow the Company to accelerate
discussions involving near-term financing and strategic options for
the project."
An important milestone in the near term will be the filing of a
NI 43-101 compliant Preliminary Economic Assessment Report,
including a resource statement. Recent and ongoing confirmation
drilling at Comstock/Mountain Lion and stockpiles on the property
is anticipated to allow SRK to bring portions of Palladon's iron
ore resource into compliance with Canadian Institute of Mining,
Metallurgy and Petroleum ("CIM") guidelines. The Second Extension
Period, if exercised, would allow the Company time to complete a
bankable feasibility study for the project and to continue proving
up additional resources. In addition to SRK's work, the Company
continues to explore near-term and intermediate-term shipping
options that would provide cash flow to the Company.
Finally, the Company is in the last stages of completing the
2009 audited financial statements. As part of this process, the
Company anticipates that it will submit amended and restated
interim financial statements to the British Columbia Securities
Commission ("BCSC") within the next two weeks. The Company
anticipates that the trading halt will be resolved soon after
receiving approval from the BCSC at which point the audited
financial statements will be released.
On Behalf of the Board of Directors,
John W. Cutler, President and Chief Executive Officer
About Palladon
Palladon Ventures Ltd. is a junior resource company focused on
advancing the Comstock/Mountain Lion iron mine in Iron County,
Utah. Palladon also holds gold exploration projects in Nevada, Utah
and Argentina.
Disclaimer for Forward-Looking Information
Certain statements in this release are forward-looking
statements, which reflect the expectations of management regarding:
(1) the Company's ability to raise the Interim Financing, complete
feasibility studies for iron concentrate and alternate iron
products and repay a portion or all of the Luxor Loans; (2) the
Company's belief that it will raise a minimum of US $5 million in
the Interim Financing and that such funds will fully fund
operations through the end of 2010; (3) the Company's ability to
continue discussions with strategic and financial investors
regarding larger funding options to refinance and repay the Luxor
Loans, as well as to advance the concentrate and alternate iron
production projects; (4) the Company's expectation and ability to
complete a NI 43-101 compliant Preliminary Economic Assessment
Report, including a resource statement, in the near term; (5) the
Company's belief and ability to provide details of SRK's
preliminary evaluation in the near term; (6) SRK's ability to bring
portions of the Company's iron ore resource into compliance with
Canadian Institute of Mining, Metallurgy and Petroleum ("CIM")
guidelines; (7) the Company's expectation and ability to, during
the second extension period, complete a bankable feasibility study
for the project and to continue proving up additional resources;
(8) the Company's ability to explore near-term and
intermediate-term shipping options that would provide cash flow to
the company; (9) the Company's expectation and belief that the
amended and restated interim financial statements will be submitted
to the British Columbia Securities Commission ("BCSC") within the
next two weeks; and (10) the Company's belief that the trading halt
will be resolved soon after receiving approval from the BCSC at
which point the audited financial statements will be released.
Forward-looking statements consist of statements that are not
purely historical, including any statements regarding beliefs,
plans, expectations or intentions regarding the future. Such
statements are subject to risks and uncertainties that may cause
actual results, performance or developments to differ materially
from those contained in the statements. No assurance can be given
that any of the events anticipated by the forward-looking
statements will occur or, if they do occur, what benefits the
Company will obtain from them.
These forward-looking statements reflect management's current
views and are based on certain expectations, estimates and
assumptions which may prove to be incorrect. A number of risks and
uncertainties could cause our actual results to differ materially
from those expressed or implied by the forward-looking statements,
including: (1) a downturn in general economic conditions in North
America and internationally, (2) the inherent uncertainties and
speculative nature associated with mineral exploration and
production, (3) a decreased demand for minerals, (4) any number of
events or causes which may delay or cease exploration and
development of the Company's property interests, such as
environmental liabilities, weather, mechanical failures, safety
concerns and labour problems; (5) the risk that the Company does
not execute its business plan, (6) inability to retain key
employees, (7) inability to finance operations and growth, (8)
other factors beyond the Company's control (9) the risk that the
Company will not be able to raise funds due to Luxor Capital Group
and (10) the risk that the Company is unable to satisfy the BCSC's
requests. These forward-looking statements are made as of the date
of this news release and, except as required by law, the Company
assumes no obligation to update these forward-looking statements,
or to update the reasons why actual results differed from those
projected in the forward-looking statements.
Neither 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.
Contacts: Palladon Ventures Ltd. John W. Cutler President &
CEO 801.521.5252 801.521.5454 (FAX) info@palladonventures.com
www.palladonventures.com; www.ironbullmining.com