Titanium Resources Group is pleased to announce that it has reached an agreement in principle (the “Agreement”) to resolve the dispute between its subsidiary, Sierra Rutile Limited (“SRL”), and the Government of Sierra Leone (“GOSL” or “Government”) which related to funds loaned by the GOSL to SRL.
Under the terms of the Agreement, the Government will invest £13.6 million (EUR15.6 million*) of the SRL Loan into approximately 113.7 million new ordinary shares at an issue price of 12 pence per share, a 60% premium to TRG’s closing share price on 6 October 2010. Upon issue of these new ordinary shares, GOSL will own 22.8% of the Company’s enlarged issued share capital.
The outstanding debt and accrued interest due to GOSL as at today’s date will fall from EUR36.9 million to EUR21.3 million (c.£18.6 million*), a 42.3% reduction (*based on a GBP:EUR exchange rate of 1.143 on 6 October 2010).
John Bonoh Sisay, Chief Executive Officer, said:
“The Company wishes to thank the Government of Sierra Leone for its positive approach in resolving this matter quickly and amicably. This Agreement strengthens our partnership with the Government and ensures we are fully aligned in developing a strong SRL. The Company can now focus its efforts on expanding production and developing its assets towards their considerable potential.”
On August 20, 2010, the Company announced that SRL and the GOSL were in a dispute over certain interest payments due to the GOSL on a loan made by the GOSL to SRL (“the SRL Loan”). Discussions between SRL, TRG, TRG’s largest shareholder, Pala Investments Holdings Limited (“Pala”), and the GOSL have successfully resolved the matter, subject to the completion and signing of definitive documentation.
Definitive documentation is expected to be executed in the course of the next few weeks, at which time, the new shares will be issued to the GOSL and any actual or alleged events of default under the SRL Loan will be cured and the SRL Loan will be in good standing.
On issue of the new ordinary shares, the GOSL and Pala will be the Company’s largest shareholders, holding approximately 22.8% and 23.0% of the Company’s shares respectively. Admission to trading of the new ordinary shares on AIM will be sought immediately after issue. The Government’s shareholding rights in SRL are unaffected by this Agreement.
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Source: titaniumresources, October 7, 2010