TIDMNGL
RNS Number : 7918N
Norseman Gold PLC
03 October 2012
ASX: NGX
AIM: NGL
3 October 2012
Norseman Gold Plc ("Norseman" or "Company")
Consolidation of Senior Secured Debt, Operations Update and
Appointment of Voluntary Administrator to Central Norseman Gold
Corporation Limited ("CNGC")
Further to the announcement of 19 September 2012 on AIM and the
announcements of 19 September 2012 and 24 September 2012 on ASX,
the Company wishes to update shareholders and interested parties as
to recent events.
Novation of Senior Secured Debt
CNGC's principal secured lenders, EXP T1 Ltd (a corporation
associated with the Red Kite Group) and Tulla Resources Group Pty
Ltd, have reached agreement for the assignment of Red Kite's
secured debt to an associate of the Tulla Group.
Under the terms of the agreement, EXP T1 Ltd has novated to
Farrer Place Holdings Pty Ltd ACN 160 507 031, a corporation
associated with Tulla Resources Group Pty Ltd ("Tulla"), all of the
rights, obligations and liabilities under the Facility Agreement
between Central Norseman Gold Corporation Limited and EXP T1 Ltd
dated 1 July 2011 ("Facility Agreement") and associated security
documents.
The novation is considered a related party transaction for the
purposes of Rule 13 of the AIM Rules for Companies published by the
London Stock Exchange plc. It is further noted that Kevin Maloney,
a Director of the Company, is interested in the novation as a
director of Tulla.
Accordingly, it is noted that each of David Steinepreis and Gary
Steinepreis has consulted with the Company's nominated advisor,
Northland Capital Partners Limited and each of David Steinepreis
and Gary Steinepreis considers, in relation to the novation, that
the terms of the novation (and the terms upon which the Company
will participate in the novation) are fair and reasonable insofar
as the Company's shareholders are concerned.
As a result of the novation, Tulla now directly and indirectly
holds approximately A$25 million in secured debt issued by the
Company and its subsidiaries.
Operations Update
The Company had previously reported that it expected operations
to be cash positive by the end of the September quarter on the
basis that approximately 17,000 ounces of gold would be produced
for the quarter. The North Royal open pit and the Harlequin
underground mine had been forecast to provide the estimated
production however performance has been below the target for the
last three months.
There have been a number of contributing factors, including the
following:
-- The Datum points used to establish the initial Block Models
in the North Royal pit were found to be incorrect by between 2.5m
to 7.5m in the vertical.
-- The region has experienced significant rain, causing the pit
being closed for 15 operating days during July, August and
September.
-- There have been ongoing issues with contractor equipment
breakdowns in the North Royal pit, particularly the second
excavator which has only been available for approximately 50% of
the time.
-- The Harlequin underground mine remains closed due to safety concerns.
All these factors combined to create significant short term cash
flow issues as the Harlequin had been intended to provide the
majority of gold for the operation while the North Royal work was
undertaken to reach the ore levels.
To compound matters the mill has been closed due to mechanical
and maintenance problems, resulting in no gold being produced, with
the last gold sale swap occurring on 11 September 2012.
The business has now reached a critical point in respect of
short-term cash flow and as a result the directors of Norseman Gold
Plc., which is the largest creditor of CNGC, have concluded that it
is appropriate to appoint a voluntary administrator to the group's
principal operating subsidiary, CNGC, further details of which are
set out below. The Administrator intends to continue to run the
Norseman Mine as a going concern and Tulla has agreed to indemnify
the Administrator in relation to his costs.
To conserve costs the operational management agreement with L2
Project Management - Norseman Pty Ltd ("L2PM") has been terminated
and responsibility for and control of operations has been resumed
by CNGC. L2PM will continue to provide consulting support as and
when required.
Mr Andrew Matheson who was appointed as Chief Operating Officer
on 9 August 2012 is no longer with the Company.
The day to day management and operations are not affected by
either the appointment of the Administrator or the termination of
the L2PM management agreement. The management and employees of CNGC
remain focussed on restoring Harlequin to operations and continuing
the processing of North Royal.
Appointment of Voluntary Administrator to Central Norseman Gold
Corporation Limited
The Company's operations have not produced cash flow sufficient
to meet liabilities to creditors on a timely basis and Directors
have today appointed Mr Ron Dean-Willcocks of the Sydney based
insolvency practice of Dean-Willcocks Shepard as voluntary
administrator ("Administrator") to the Company's wholly owned
subsidiary CNGC.
The Administrator's immediate intention is to retain existing
management and maintain CNGC's business as a going concern.
Directors propose to submit to the Administrator a Deed of company
Arrangement for consideration of creditors that will provide for
the continuation of the business of CNGC and control to be returned
to its directors.
Contact particulars for the Administrator are:
Dean-Willcocks Shepard
Tel: (02) 9234-0400
Email: mail@dwsrecovery.com.au
Address : Level 2
32 Martin Place
SYDNEY NSW 2000
Suspension from trading of Norseman Gold Plc. on ASX and AIM
Although the agreement between Tulla and EXP T1 Ltd has resolved
the immediate financial difficulties faced by the Company, whilst
an administrator remains appointed to CNGC the Company's ordinary
shares will continue to be suspended from trading on both ASX and
AIM.
The Company will make further announcements regarding its
progress both operationally and corporately as soon as
possible.
* * ENDS * *
For further information visit www.norsemangoldplc.com, email
investors@ngold.com.au or contact:
David Steinepreis Norseman Gold Plc. Tel: +44 (0) 7913402727
William Vandyk Northland Capital Partners Ltd Tel: 020 7796
8800
Guy Wilkes Ocean Equities Ltd Tel: 020 7786 4370
Susie Geliher / Hugo de Salis St Brides Media & Finance Ltd
Tel: 020 7236 1177
Forward-Looking Statements:
This regulatory news release contains certain forward-looking
statements, which include assumptions with respect to future plans,
results and capital expenditures. The reader is cautioned that
assumptions used in the preparation of such information may prove
to be incorrect. All such forward-looking statements involve
substantial known and unknown risks and uncertainties, certain of
which are beyond the Company's control. Please refer to the
Company's Admission Document available from the Company's web site
for a list of risk factors. The Company's actual results could
differ materially from those expressed in, or implied by, these
forward-looking statements and, accordingly, no assurances can be
given that any of the events anticipated by the forward-looking
statements will transpire or occur, or if any of them do so, what
benefits the Company will derive there from. All subsequent
forward-looking statements, whether written or oral, attributable
to the Company or persons acting on its behalf are expressly
qualified in their entirety by these cautionary statements.
Furthermore, the forward-looking statements contained in this news
release are made as at the date of this news release.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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