TIDMLND
RNS Number : 5046Q
Landore Resources Limited
13 September 2017
13 September 2017
Landore Resources Limited
("Landore" or the "Company")
Debt Settlement Agreement with Lamaune Iron Inc.
Landore is pleased to announce that its wholly owned subsidiary,
Landore Resources Canada Inc. ("Landore Canada"), has today entered
into a debt settlement agreement ("Debt Settlement Agreement") with
Lamaune Iron Inc. ("Lamaune").
Pursuant to the Debt Settlement Agreement, Lamaune has agreed,
conditional on its own shareholder approval, to issue to Landore
Canada 576,192,087 common shares in the capital of Lamaune, in full
satisfaction of the loan receiveable from Lamaune.
Following the issue of the shares, Landore Canada will hold
90.2% of the issued shares of Lamaune.
Background
In June 2011, Landore demerged certain of its mining claims and
assets relating to the Lamaune iron ore and gold deposits (the
"Lamaune Assets") by means of a distribution in specie of the
entire issued share capital of Lamaune to the then current
shareholders of Landore and the transfer of the Lamaune Assets to
Lamaune from Landore Canada (the "Original Transaction"). Prior to
effecting the Original Transaction, Lamaune, which had been formed
specifically for purposes of the Original Transaction, was a
wholly-owned subsidiary of Landore.
The purchase price for the transfer of the Lamaune Assets to
Lamaune was CDN$6,200,000, which was satisfied by the issuance of a
promissory note by Lamaune, as replaced effective as of August 29,
2012 and April 30, 2014 (the "Promissory Note"), and secured by a
loan agreement, as amended effective as of August 29, 2012 (the
"Loan Agreement"), and security agreement (the "Security
Agreement") between Lamaune and Landore Canada (collectively, the
"Loan Documents"). In connection with the Original Transaction,
Landore also agreed to make a loan facility available to Lamaune
for working capital requirements.
Pursuant to the amendments to the Loan Agreement referenced
above, among other matters, the maturity date was extended to April
30, 2019, certain payments were made by Lamaune to Landore Canada
in respect of the interest accrued and owing up to April 30, 2014
and the interest provisions were revised such that the principal
amount outstanding from time to time shall not bear any interest
subsequent to April 30, 2014.
Pursuant to the Loan Agreement and Promissory Note, as at the
date of this announcement, Lamaune is indebted to Landore Canada in
the aggregate amount of CDN$6,159,320.
In the accounts of Landore for the year ended 31 December 2014,
due to a severe downturn in the global iron ore market, the
Directors of Landore decided to make a full provision for
impairment against the receivable from Lamaune.
Rationale for the Debt Settlement Agreement
The Original Transaction was effected following a strategic
review of Landore's assets (as held through Landore Canada), which
resulted in the proposal that the Lamaune Assets be transferred
from Landore Canada to a separate entity (being Lamaune). Following
further review of the Lamaune Assets, management of Lamaune
together with the Directors of Landore have determined that it
would be in the best interests of both Landore and Lamaune to
remerge the Lamaune Assets with the existing assets and properties
of Landore (as held through Landore Canada), which are contiguous
with the Lamaune Assets.
As previously announced, following the successful discovery of
the BAM East Gold prospect in late 2015, Landore initiated a review
of the geology and mineralisation on several of the Company's
earlier gold findings including the re-interpretation of the
Lamaune Gold Deposit. The reviews concluded that several of these
gold prospects, including the Lamaune Gold Deposit, were similar in
geology and mineralisation to the BAM East Gold Deposit.
The review has encouraged the Company's belief that the
favorable geological lithology containing the BAM East Gold Deposit
has the potential to continue along the full east west extent of
the greenstone belt traversing the Landore-Lamaune properties.
Accordingly, the Directors of Landore consider that it would be in
the interests of Landore shareholders to remerge the Lamaune Assets
into the group in order that Landore can continue its exploration
programme along this trend.
The Debt Settlement Agreement is subject to the receipt of
approval by shareholders of Lamaune at a special meeting of Lamaune
to be held on 11 October 2017, for which a circular, dated 12
September 2017, is expected to be posted to Lamaune shareholders on
14 September 2017. A further announcement will be made following
this meeting.
Related Party Transaction
Bill Humphries and Richard Prickett are directors of both
Landore and Lamaune and accordingly, the entering into the Debt
Settlement Agreement is deemed to be a related party transaction
under the AIM Rules. The independent directors, being the Directors
other than Bill Humphries and Richard Prickett, consider, having
consulted with the Company's nominated adviser, Strand Hanson
Limited, that the terms of the Debt Settlement Agreement are fair
and reasonable insofar as the Company's shareholders are
concerned.
Enquiries:
Bill Humphries / Richard Prickett
Landore Resources Limited
Tel: 07734 681262
Tel: 07775 651421
Angela Hallett / James Spinney
Strand Hanson Limited
Nomad / Broker
Tel: 020 7409 3494
This announcement contains inside information as defined in
Article 7 of the Market Abuse Regulation No 596/2014.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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