Vancouver With its flagship Bounty mine under voluntary administration, Viceroy Resource (VOY-T) has inked a settlement agreement with creditors that paves the way for the company to seek new opportunities.
The deal was reached with NM Rothschild & Sons and Macquarie Bank Ltd., which hold certain borrowings and hedging agreements relating to Viceroy’s Australian operations.
Viceroy agreed to pay $732,000 ($500,000 was previously paid) and deliver 23 million shares of its stock, plus a secured bond which Viceroy holds in NovaGold Resources (NRI-T), and a note for $3 million.
The note holds an interest rate of LIBOR plus 2% and is repayable from 60% of Viceroy’s portion of the free cash flow from the Castle Mountain Mine, starting in November.
The notes outstanding after July 31, 2002, will be convertible into shares at the average market price for the previous five days. Any remaining note outstanding as of Dec. 31, 2003, will be converted to shares. The agreement is expected to close by Sept. 21. Viceroy believes the agreement will assist in the restructuring and disposing of the Australian assets.
The company’s financial woes began after it acquired the Bounty gold mine in Australia. Viceroy picked up the operation in 1999 from LionOre Mining International (LIM-T) for US$24.6 million in cash and shares.
At the end of 1998, Bounty was host to proven and probable reserves of 2 million tonnes grading 5.17 grams, equivalent to 331,000 oz. Total resources stood at 8.8 million tonnes grading 3.92 grams, equivalent to 1.1 million contained ounces.
Bounty is an underground operation. It is supplemented by smaller, lower-grade open-pit deposits and has a carbon-in-leach plant that is capable of processing 750,000 tonnes per year.
The company also holds a 75% stake in the Castle Mountain mine in Southern California and recently took a $30.6-million writedown on its wholly owned Brewery Creek mine in the Yukon.
On the exploration front, Viceroy owns the Gualcamayo gold project in Argentina.
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