KEY HIGHLIGHTS
- Non-binding term sheet signed with St Barbara Limited (ASX: SBM) (“St Barbara”) to settle the Second Fortune finance facility (“Debt Restructure”).
- Linden to be debt free as a result of the Debt Restructure which includes a share and contingent payment settlement to be completed on or before 31 July 2023.
- Debt Restructure materially resets LGA’s balance sheet and enables:
- continued gold production from Second Fortune;
- expedited exploration and M&A opportunities; and
- potential ore production from Devon JV from early CY24.
- St Barbara to become LGA’s major shareholder with ~30% of Linden.
- New processing agreement to be entered into with Genesis Minerals Limited (ASX: GMD) (“Genesis”) – the new owner of Gwalia.
Linden Gold Alliance Limited (“Linden” or “LGA”) is pleased to announce that it has signed a non-binding term sheet to execute the revised Debt Restructure with St Barbara.
Furthermore, Linden is also transitioning its ore sale arrangement to Genesis – the new owner of Gwalia. Linden has delivered ~340kt of ore yielding ~40koz of gold to Gwalia since production re-commenced at Second Fortune in April 2021.
Linden Gold Alliance Managing Director, Andrew Rich commented,
We wish to thank St Barbara for re-affirming its support of Linden with the revised Debt Restructure – we look forward to having St Barbara as our major shareholder. We expect that transitioning to a debt free junior producer while continuing our focus on increasing margins and growth will increase the investment proposition of Linden. We also look forward to continuing our relationship with the Gwalia team under the new ownership of Genesis.
Debt Restructure
St Barbara and LGA have signed indicative terms to settle and wind down the secured Second Fortune finance facility by way of a $6 million share payment (“Total Share Payment”) and $5 million of contingent payments payable in two equal tranches upon two growth-related milestones being met (“Contingent Payments”) for a total consideration of $11 million.
The Debt Restructure includes settling all amounts owed to St Barbara.
Linden originally borrowed $16 million from St Barbara in December 2020 to redevelop the Second Fortune underground mine. Initial ore production occurred four months later, with first gold poured in April 2021.
Under the terms of the Debt Restructure, settlement will occur on or before 31 July 2023 upon the following completion items (“Completion”):
- $2,176,000 share payment issued at $0.16 per share (13,600,000 shares) (“First Share Payment”) taking St Barbara’s holding in Linden to 19.8%; and
- $5,000,000 Contingent Payments payable in cash as follows:
- $2,500,000 payable on LGA making a new JORC-compliant discovery of 50,000 ounces at a minimum grade of 4.0g/t Au within three years or alternatively where total Group Mineral Resources surpass 500,000 ounces (“Resource Payment”), and
- $2,500,000 payable by LGA upon the sale of a cumulative 20,000 project ounces of gold from the Devon open pit joint venture (“Devon Payment”).
- Upon binding documentation being entered into with respect to the First Share Payment and Contingent Payments, including issuance of shares under the First Share Payment, the Debt Restructure will complete, the Second Fortune facility agreement will terminate and St Barbara’s security over LGA and its assets will be released.
- Following Completion and pursuant to the requirements of item 7 s611 of the Corporations Act, LGA will require shareholder approval to pay the balance of the Total Share Payment and therefore, LGA will progressively issue shares to St Barbara upon completion of any capital raise or other dilutive events to ensure St Barbara maintains a shareholding of 19.8%, with any outstanding unpaid shares to be subject to shareholder approval (“Subsequent Share Payments”). If for whatever reason, LGA does not receive shareholder approval, LGA must cash settle the outstanding balance of the Share Payment within 60 days if LGA shareholders voting against the resolution for St Barbara to exceed 20%. Linden has commenced preparations for an Extraordinary General Meeting, including the appointment of an independent expert, to vote on a resolution for the approval of the Subsequent Share Payments.
