The Mission Group Regulatory News (TMG)

31 Mar 2006 18:30

Thistle Mining Inc.31 March 2006 Thistle announces Credit Arrangement with major shareholders Toronto, March 31, 2006 - Thistle Mining Inc. ("Thistle") (AIM: TMG) Thistle Mining Inc. (" Thistle or the Company"), the AIM listed gold miningcompany, announces that it has entered into an arrangement ("Arrangement") withits two largest creditors and shareholders, MC Resources Limited ("MC") andCasten Holdings Limited ("Casten") whereby they have agreed, subject to certainconditions, to continue to assist the Company by: • Deferring repayment of interest and principal due on loans advanced by them to the group until April 1, 2007; and • Providing a short-term credit facility of up to US$8.62 million (up to $4.310 million from each of Casten and MC ) and allow for deferring repayment of the funds drawn from this credit facility until April 1, 2007. Drawings from the credit facility are to bear interest at 12% per annum, afterthe deduction of applicable withholding taxes. A financing fee of 3% of theamount drawn from this facility is to be charged. The Arrangement provides that the commitments thereunder will be void and of noforce or effect when there occurs certain events listed in the agreement settingout the Arrangement, including a material deterioration in the economiccircumstances applicable to Thistle or any material adverse change in thebusiness, assets, liabilities, condition (financial or otherwise) and prospectsof Thistle or any of its subsidiaries. The credit facility will be used to fund Thistle's budgeted working capitalrequirements for the remainder of 2006 and early 2007. While the board ofdirectors of Thistle considered the amount of the facility to be adequate basedupon an internal assessment of cash flow requirements, it has not obtained anindependent verification by external auditors of Thistle's working capital needsfor 2006. Having reviewed the cash flow forecasts of the group, it ismanagement's belief that existing cash resources, net cash that is anticipatedto be generated from operations and net cash that is anticipated to be generatedfrom the sale of assets and additional funding will be sufficient to meet thegroup's anticipated commitments. Future cash flows are subject to a number ofrisk factors, most significantly, the performance of President Steyn Gold Mines("PSGM"), the gold price, the ZAR:US $ exchange rates and the results of thefeasibility studies of the Company's Masbate project in the Philippines andGolden Triangle project at PSGM, both scheduled to be completed in May 2006.Depending on these and other factors, the board of directors of Thistlerecognises that it may be necessary for Thistle to raise further funds during2006. Should the Golden Triangle project or Masbate project be approved fordevelopment, additional financing will be needed. As at December 31, 2005, the debts owing to Casten and MC are as follows: • Pre Companies' Creditors Arrangement Act ("CCAA") loan of CDN $1.965 million due to MC and CDN $1.965 million due to Casten. Both loans bear annual interest at 10%, after the deduction of applicable withholding tax, with quarterly repayments due as from 31 March 2006 of CDN $163,750 each. Final payment is required on 30 June 2008. As a result of the Arrangement, payment of principal and interest due has been deferred until April 1, 2007. • Pre CCAA loan of CDN $13.5 million due to MC and CDN $13.5 million due to Casten. Both loans bear annual interest at 12%, after the deduction of applicable withholding tax, with quarterly repayments due as from 31 March 2006 of CDN $1,250,000 each. Final payment is required on 30 June 2008. As a result of the Arrangement, payment of principal and interest due has been deferred until April 1, 2007. • Pre CCAA loan of $10 million due to MC and $10 million due to Casten. Both loans bear annual interest at 10%, after the deduction of applicable withholding tax, with quarterly repayments due as from 31 March 2006 of $833,333 each. Final payment is required on 30 June 2008. As a result of the Arrangement, payment of principal and interest due has been deferred until April 1, 2007. • Post CCAA loans of $6.3 million due to MC and $6.3 million due to Casten were advanced to the Company. Both loans bear annual interest at 12%, after the deduction of applicable withholding tax, and are repayable on demand. A 3% financing fee is charged on each payment received in terms of these loans. As a result of the Arrangement, payment of principal and interest due has been deferred until April 1, 2007. For the three month period ending March 2006 additional loans of $0.340 milliondue to MC and $0.340 due to Casten were advanced to the Company. Both loans bearannual interest at 12%, after the deduction of applicable withholding tax, andare repayable on demand. A 3% financing fee is charged on each payment receivedin terms of these loans. Pursuant to the terms of the Arrangement , payment ofprincipal and interest due has also been deferred until April 1, 2007. The Company has granted to MC and Casten, or their agent, a security interest orcharge of all the Company's ensuing and after acquired assets including theshares of its wholly owned subsidiary, Philippine Gold Limited, as security forpayment of all present and future debt owing by the Company to MC and Casten. The credit facility constitutes a related party transaction for the purposes ofthe AIM rules and under applicable Canadian securities legislation. Thedirectors have concluded that the terms of the Arrangement are commerciallyreasonable which are not less advantageous to Thistle than if the Arrangementwas obtained from an arms length party. As such, the independent directors andthe Thistle board of directors have concluded that, following consultation withGrant Thornton Corporate Finance (in its capacity as nominated adviser toThistle); the terms of the Arrangement are fair and reasonable insofar asThistle's shareholders are concerned In giving its advice, Grant ThorntonCorporate Finance has taken into account the directors' commercial assessment. For further information, please contact: Andy Graetz, Chief Financial Officer + 27 57 391 9114 or email toagraetz@disselgroup.com This information is provided by RNS The company news service from the London Stock Exchange