The Mission Group Regulatory News (TMG)

24 Oct 2007 17:30

Thistle Mining Inc.24 October 2007 Thistle concludes Consent Agreement and Receipts and Acknowledgement Deed pursuant to a debt restructuring plan Toronto, 24 October 2007 - Thistle Mining Inc. ("Thistle" or the "Company")(AIM: TMG) Background Pursuant to a sale and purchase agreement entered into between Thistle, CGAMining Limited ("CGA") and Central Asia Gold Limited ("Central Asia") dated 31January 2007 (as amended, the "SPA"), Thistle (through its wholly owned Dutchsubsidiary, Toowong Mining B.V. ("Toowong")), acquired approximately 25.4% ofthe shares in the capital of CGA (the "Toowong Shares"). Under the terms of theSPA, Thistle was entitled to payment by Central Asia of deferred considerationequal to U.S.$1.0 million and U.S.$4.0 million payable on 20 August 2007 and 20March 2008, respectively (less any amount(s) required to meet any substantiatedwarranty and indemnity claims that may be made by Central Asia or CGA). The aggregate amount of Thistle's outstanding indebtedness (the "CastenIndebtedness") to Casten Holdings Limited ("Casten") is CDN$15,594,190 andU.S.$14,243,050 as of 1 October 2007, which is comprised of CDN$11,287,164 andU.S.$ 10,306,000 of principal and CDN$4,307,026 and U.S.$3,937,050 of accruedbut unpaid interest and fees thereon. The aggregate amount of Thistle's outstanding indebtedness (the "MC ResourcesIndebtedness") to MC Resources Limited ("MC Resources") is CDN$15,594,190 andU.S.$14,245,371 as of 1 October 2007, which is comprised of CDN$11,287,164 andU.S.$10,306,000 of principal and CDN$4,307,026 and U.S.$3,939,371 of accruedbut unpaid interest and fees thereon. On 11 April 2007, Thistle entered into a non-binding memorandum of agreement inrespect of the restructuring of indebtedness owing by Thistle to MC Resourcesand Casten (the "Memorandum of Agreement"). The Memorandum of Agreementcontemplated (amongst other matters) the transfer of Thistle's (direct orindirect) ownership interest in the Toowong Shares to MC Resources and Casten,based on a price per CGA share of AUS$0.65 being the price per share providedfor in the SPA, which would result in the reduction of Thistle's indebtedness toMC Resources and Casten in an aggregate amount of U.S.$25.5 million. On 11 May 2007, Thistle entered into a debt standstill agreement with MCResources and Casten (the "Standstill Agreement") pursuant to which MC Resourcesand Casten agreed (amongst other matters) that should CGA's consent to thetransfer of the Toowong Shares to MC Resources and Casten not be obtained by 11August 2007, the arrangements provided for in the Memorandum of Agreement wouldlapse. In addition, upon the occurrence of certain circumstances, the StandstillAgreement would be terminated. On 27 June 2007, Thistle announced (amongst other matters) that: (a) a framework had been laid down in April and May 2007 for the restructuring of the remaining indebtedness owed by Thistle to its major creditors, MC Resources and Casten, in accordance with the terms of the Memorandum of Agreement and the Standstill Agreement; and (b) Thistle had provided a number of warranties to CGA and Central Asia and would remain subject to possible claims under the terms of the SPA related to the disposal of Thistle's interest in the Masbate gold project located in the Philippines. Although no formal claims or actions related to the SPA and the sale of Thistle's interest in the Masbate gold project have been received, CGA and Central Asia had reserved their rights in connection with the SPA and the events leading up to completion of the sale. CGA's consent was not obtained by 11 August 2007 and, accordingly, thearrangements provided for in the Memorandum of Agreement lapsed. In addition,upon the occurrence of certain circumstances referred to in the StandstillAgreement, the Standstill Agreement became of no force or effect. Accordingly,upon demand by MC Resources and Casten, all of the MC Resources Indebtedness andthe Casten Indebtedness would become immediately due and payable. Consent Agreement Thistle, MC Resources, Casten, CGA, Central Asia and Toowong have entered into aconsent agreement dated 16 October 2007 (the "Consent Agreement"). Pursuant to the Consent Agreement, CGA and Central Asia have consented to thetransfer by Thistle to MC Resources and Casten of the Toowong Shares (directlyor indirectly). In addition, CGA has agreed that Toowong will subscribe for its pro rata shareof a planned equity issue by CGA (excluding a CDN$5m over-allotment option)which is scheduled to take place in mid-November 2007 (and in any event prior to30 November 2007) ("Equity") at a price not exceeding CDN$0.83 per share (butnot exceeding an aggregate subscription payment of CDN$8,882,000). MC Resourcesand Casten have agreed to provide loans or other financing (directly orindirectly) to Toowong to enable it to subscribe for the Equity. Under the Consent Agreement, the obligations to pay the deferred considerationto Thistle have been terminated and Central Asia has agreed to pay a reducedamount of U.S.$4.5 million to MC Resources and Casten. Under the Consent Agreement, Central Asia and CGA have provided a full releaseto Thistle, its directors and officers and all other parties involved in thesale of the Masbate Project from and in respect of all existing or future claimsin connection with the SPA and the acquisition by Central Asia of the interestsof Thistle in the Masbate gold mine pursuant thereto. Outstanding Indebtedness and Receipts and Acknowledgement Deed Subsequent to the Consent Agreement, MC Resources, Casten, Thistle and PresidentSteyn Gold Mines (Free State) (Proprietary) Limited have entered into a receiptsand acknowledgement deed dated 22 October 2007 (the "Deed"). Under the Deed in return for the agreement by Thistle to transfer its (direct orindirect) interest in the Toowong Shares to MC Resources and Casten and toterminate all of its interest in, and not to claim payment of, the deferredconsideration, MC Resources and Casten have acknowledged payment by Thistle, andthe reduction and set-off against the Casten Indebtedness and the MC ResourcesIndebtedness, of: (a) an amount equal to U.S.$37,801,781 based on a price per CGA share held by Toowong of CDN$0.90 per share, at an exchange rate of U.S.$1.0248/CDN$; and (b) an amount equal to U.S.$4.5 million. Accordingly, MC Resources and Casten have acknowledged payment, reduction of andset-off against the MC Resources and Casten Indebtedness of an aggregate amountequal to U.S.$42,301,781. The remaining outstanding indebtedness is estimated atapproximately U.S.$20.8 million of which U.S.$1.4 million is principal debtoutstanding and U.S.$19.4 million relates to outstanding interest as at 1October 2007, taxes and fees. The transfer is expected to be completed byOctober 30, 2007 in accordance with the obligations set forth in the ConsentAgreement. Related Party Matters In addition to being major creditors of Thistle, MC Resources and Casten eachown 35% of the outstanding shares of Thistle and as a result are each a "relatedparty" of Thistle for the purposes of Ontario Securities Commission Rule 61-501- Insider Bids, Issuer Bids, Business Combination and Related Party Transactions("Rule 61-501"). Accordingly, the completion of certain of the transactions contemplated by theConsent Agreement including the transfer of the Toowong Shares to MC Resourcesand Casten and the reduction of, and set-off against, the Casten Indebtednessand the MC Resources Indebtedness under the terms of the Deed (the "RelatedParty Transactions"), will constitute a "related party transaction" for thepurposes of Rule 61-501. Thistle is relying on the "financial hardship" exemption described in Rule61-501 from the formal valuation and minority shareholder approval requirementsof Rule 61-501. Thistle's directors and at least two thirds of its independentdirectors (the "Directors") have determined that: (a) Thistle is in serious financial difficulty; (b) Thistle has exhausted all alternative methods of financing and the only option remaining is to dispose of a substantial part of its business in order to reduce Thistle's debt burden; (c) the Related Party Transactions are designed to improve Thistle's financial position; and (d) the Related Party Transactions are reasonable in the circumstances of Thistle. The Directors (with the exception of any director who is involved in thetransaction as a related party) have consulted with the Company's nominatedadviser, Grant Thornton, and believe that the Related Party Transactions are inthe best interests of Thistle and its shareholders as a whole. The Related Party Transactions also constitute related party transactions forthe purposes of the AIM Rules. As such, the Directors (with the exceptionof any director who is involved in the transaction as a related party) haveconcluded that, following consultation with Thistle's nominated adviser, GrantThornton, the terms thereof are fair and reasonable insofar as Thistle'sshareholders are concerned. In giving its advice, Grant Thornton has taken intoaccount the directors' commercial assessment. If Related Party Transactions are not completed, the Directors believe thatThistle will be unable to meet its financial commitments as they fall due andconsequently will be unable to continue to operate. In this event, MC Resourcesand Casten will utilise any legal means necessary, including appointment of areceiver, liquidator or administrator, to realise upon their security interestsin respect of the Casten Indebtedness and the MC Resources Indebtedness. Thistle believes that after the Related Party Transactions are undertaken,Thistle will continue to operate its core asset, the President Steyn Gold Mine,which Thistle is currently in non-binding negotiations to dispose of, in anorderly fashion, to a third party, Pamodzi Gold Limited (JSE: PZG). Reference ismade to the Company's press announcement dated 5 October 2007 (Thistle announcesacceptance of a revised offer for its interests in the President Steyn GoldMine). This belief is dependent (amongst other matters) on productionimprovements in line with management's expectations, gold production not fallingbelow 340 kilograms for the month of November 2007 and no other materialdeterioration in the economic circumstances applicable to Thistle and itssubsidiaries or any other material adverse effect on its or its subsidiaries'business, assets, liabilities or condition (financial or otherwise) occurringafter the date hereof. Forward Looking Information: This press release may contain or refer toforward-looking information based on current expectations. Forward-lookingstatements are subject to significant risks and uncertainties, and other factorsthat could cause actual results to differ materially from expected results.These forward-looking statements are made as of the date hereof and the Companyassumes no responsibility to update or revise them to reflect new events orcircumstances. For further information, contact: Anton Kakavelakis, Chief Financial Officer + 27 57 391 9026 or email toinfo@disselgroup.com Gerry Beaney, Maureen Tai or Troy MacDonald Grant Thornton Corporate Finance at+44 (0) 207 383 5100 This information is provided by RNS The company news service from the London Stock Exchange