The Mission Group Regulatory News (TMG)

5 Oct 2007 16:30

Thistle Mining Inc.05 October 2007 Thistle announces acceptance of a revised offer for its interests in the President Steyn Gold Mine Toronto, October 5, 2007 - Thistle Mining Inc. ("Thistle" or the "Company")(AIM: TMG) Update on Forecast Gold Sales The Company wishes to announce a downward revision to the forecast gold sales ofits subsidiary President Steyn Gold Mines (Free State) (Pty) Ltd ("PSGM") for2007 from the previous forecast made in August 2007 of 132,600 oz to 123,500 oz.The adjustment follows flooding of the number 3 shaft bottom due to pumpfailures restricting the ability of the shaft to hoist and an explosion at thenational electricity supplier's substation at number 2 shaft resulting inextensive damage to the building and electrical equipment and significantdowntime at both number 2 shaft and the Gold Plant. Management sees theseproduction problems as being of a short term nature. Due to the reduction in the forecast sales and the strengthening of the ZARrelative to the US$, cash and total costs for 2007 are now forecast to bebetween $670 and $680 per ounce and $715 and $725 per ounce respectively,assuming an average exchange rate of 7.12 ZAR:US $ for 2007. Cash cost per ouncesold is not a recognized measure under Canadian GAAP. The production problems have necessitated additional funding during September2007 of $1.192 million by Casten Holdings Limited ("Casten") and MC ResourcesLimited ("MC") which money was advanced to PSGM on September 28, 2007. PSGM willpay interest at prime plus 2% per annum and the loan is to be secured againstassets of PSGM. As Casten and MC each own 35% of the outstanding shares ofThistle and are the Company's major creditors, this additional fundingconstitutes a related party transaction for the purposes of the AIM Rules. Assuch, the independent directors have concluded that, following consultation withthe Company's nominated adviser, Grant Thornton, that the terms of theadditional funding are fair and reasonable insofar as Thistle's shareholders areconcerned. In giving its advice, Grant Thornton has taken into account thedirectors' commercial assessment. Suspension of shares to trading on AIM Following the deterioration in the financial condition of PSGM and theuncertainty relating to the Company's financial situation, the Company's Boardof Directors requested the suspension of trading in the Company's common shareson the AIM Market of the London Stock Exchange on September 24, 2007. A liftingof this suspension is conditional on the Company being able to demonstrate itsfinancial viability, which remains uncertain at this time. The Directorsconsider it appropriate to maintain the suspension of the Company's sharespending clarification of the Company's financial position. Acceptance of letter of intent regarding revised terms of an offer by PamodziGold Limited At a meeting held on September 20, 2007 Thistle executives informed executivesof Pamodzi Gold Limited ("Pamodzi") (JSE: PZG) of production problemsexperienced at PSGM and that, absent funding from MC and Casten for September2007, PSGM would not be able to meet its immediate liabilities as they fell due. Upon confirmation from Pamodzi that they remained willing to proceed with atransaction but on revised terms, MC and Casten provided PSGM with $1.192million in funding on September 28, 2007. Subsequent to these discussionsThistle received a revised offer in a letter of intent from Pamodzi on October1, 2007. On October 2, 2007 (the "Acceptance Date") and following deliberationsby the Company's Board of Directors, Thistle notified Pamodzi of its acceptanceof the terms of the revised letter of intent. Under the terms of the revised letter of intent the purchase consideration forall the direct and/or indirect interests in PSGM payable to Thistle (on itsbehalf and on behalf of all other holders of such interests) will now be ZAR250million (Two Hundred and Fifty Million South African Rands) (approximately US$35.7 million (Thirty Five Million Seven Hundred Thousand United States Dollars))at an exchange rate of ZAR 7.00 to the US$ (the "Purchase Consideration"). Thetransaction is conditional on matters normal for a transaction of this kind butincludes a requirement that production at PSGM exceed 340 kgs in each of Octoberand November 2007 respectively. The Purchase Consideration is to be satisfied through the payment on completionof ZAR 100 million (One Hundred Million South African Rands) in cash(conditional on a placement of shares of Pamodzi) and ZAR 150 million (OneHundred and Fifty Million South African Rands) to be paid in convertibleinterest bearing debt securities (the "Pamodzi SPV Securities") issued by aspecial purpose vehicle wholly owned by Pamodzi Resources Limited (the "SPV")which will acquire a specified number of ordinary shares in Pamodzi (the "Pamodzi Gold Shares") for an amount of ZAR 150 million (One Hundred and FiftyMillion South African Rands). The cash portion of the purchase consideration will be adjusted upwards ordownwards (as the case may be) by the difference between the net working capitalof PSGM as at 30 June 2007 and as at the completion date of the transaction. Inaddition the cash portion of the purchase consideration will be adjusteddownwards by one half of the aggregate working capital loans advanced to PSGM byCasten and/or MC and all the interest and fees related thereto. At this stage anadjustment downwards of between ZAR 30 million and ZAR 50 million in the cashportion of the consideration is expected. On or after May 31, 2009 (or in limited circumstances, prior thereto), Thistlewill be entitled to repayment of the outstanding debt under the Pamodzi SPVSecurities including interest and an agreed percentage of any increase in thevalue of the Pamodzi Gold Shares held by the SPV. This will be settled by way ofa transfer of Pamodzi Gold Shares to Thistle or out of the proceeds of a sale ofthe Pamodzi Gold Shares. In the event that Pamodzi withdraws from the proposed transaction it has agreedto pay a break fee of ZAR5 million (Five Million South African Rands) toThistle, subject to certain limited conditions. Although Pamodzi and Thistle are confident that they will be able to concluderequired transaction agreements and secure regulatory approval within a threemonth period there can however be no assurance that these discussions willresult in a transaction. Should negotiations proceed as planned, it is envisaged that a meeting of theCompany's shareholders to consider the proposed sale of PSGM will take placeduring late November 2007 in Toronto. A meeting of Pamodzi shareholders, asrequired, will be held in Johannesburg at or about the time of the meeting ofthe Company's shareholders to consider the proposed sale and purchase of PSGM. It is anticipated that subject to regulatory approval Pamodzi will assumeoperational control of PSGM during December 2007. The Company's Board of Directors is considering using the proceeds of the saleprimarily to meet the Company's outstanding debt obligations and will beconsidering the future direction of the Company and discussing this with theCompany's bankers. For further information, contact: Anton Kakavelakis, Group Financial Controller + 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 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. This information is provided by RNS The company news service from the London Stock Exchange