Morning, since no one has posted this last news release from end of march, here it is. Copper has been strengthening, whether that will be of any help, is a long shot.
Armada Gold Corporation
AAU TSE Add to Portfolio
March 30, 1999
Plans Reorganisation
ARMADA GOLD CORP ("AAU-TY;AGCAF-L")
- Plans Reorganisation
John Hopkins, Chairman of ARMADA GOLD CORP announces that the continuing low copper and gold prices, combined with adverse stock and capital market conditions for mining and development companies, has led Armada to adopt a corporate strategy to eliminate all debt and place the Company on a stronger financial footing pending a change in market sentiment. The Board has agreed, after obtaining appropriate legal advice and after preliminary discussions with some major creditors, debentureholders and shareholders, to pursue a proposal for a reorganisation of the Company.
The proposed reorganisation would involve the issue of shares to creditors and debentureholders, followed by a consolidation of the Company's capital and an equity financing.
The planned sale of the Erdmin copper project to High Plains Resources has, despite prolonged discussions, not closed or been finalised. The immediate effect of this delay and of the very low copper price and seasonal production downturns is that the project is cash deficient. The Mongolian operating company Erdmin, which is 49% owned by Armada, has a shortfall in its Maurbeni loan account of approximately US$400,000. If the proposed reorganisation is proceeded with the only outstanding current liability would be the Company's Erdmin project loan commitments to Marubeni Corporation which are joint and severally guaranteed by Armada and its partner Erdenet Concern Company. Armada remains in negotiation with Marubeni and High Plains Resources in connection with this shortfall and its corporate guarantee of Erdmin.
Armada proposes to settle its outstanding convertible debentures (both the principal amount and the accrued and unpaid interest thereon being approximately Cdn$ 8.3 million) and outstanding accounts payable to employees and trade creditors (approximately Cdn$ 2.3 million) by way of issuance of common shares of Armada. It is expected that these debt-for-equity settlements will result in doubling of the Company's share capital by the issuance of approximately 110 million new Common Shares. The current number of issued and outstanding common shares is approximately 110 million shares.
Following the issuance of common shares to Armada's creditors. Armada plans to implement a consolidation of its outstanding common share capital on the basis of approximately ten pre-consolidation common shares being exchanged for one post-consolidation common share. The reorganisation proposal will require creditor, shareholder and regulatory approval in order to be implemented.
At present, the Company has written to all noteholders and creditors seeking their consent to the proposal and shareholders will be kept advised.
TEL: 61-8-9322-7177 John Hopkins, ChairmanTEL: (604) 684-0710 Peter Tredger, Director
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