Finally the news everyone has been hoping to see....
This is very positive stuff:
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Brazilian Resources Inc - News Release
Brazilian reduces liabilities by $2.24-million (U.S.)
Brazilian Resources Inc
YBZ
Shares issued 51,582,652
2001-03-30 close $0.15
Wednesday Apr 4 2001
News Release
Mr. Daniel Titcomb reports
As a result of a favourable lawsuit settlement, Brazilian
Resources has extinguished debentures to reduce its current
liabilities by $2.24-million (U.S.), and has eliminated a
2-per-cent royalty payment on future production from its
100-per-cent-owned Sabara gold property.
The Sabara property is located in Brazil's most prolific
mining camp, known as the Quadrilatero Ferrifero (iron
quadrangle), which is host to numerous gold deposits in
banded iron formations. The concessions cover approximately
6,000 acres abutting Anglogold's Lamego mine, 40 kilometres
east of Belo Horizonte, Minas Gerais.
The following is a brief history of the events leading to the
resolution of Jacobina Mineracao e Comercio Ltda. and
William Resources Inc. v. Brazilian Resources (the civil
action).
William Resources (currently known as William Multi-Tech
Inc.) and Brazilian entered into a joint venture agreement in
July, 1995, to acquire and explore the Sabara property in
Minas Gerais, Brazil.
William assigned its interest in the joint venture to its
subsidiary, Jacobina Mineracao e Comercio Ltda., and in
1997, Brazilian purchased all of the interest of Jacobina and
William in the joint venture to increase its ownership in the
Sabara property to 100 per cent.
Under the purchase and sale contract with Jacobina, Brazilian
issued a series of 8-per-cent debentures totalling
$2.75-million (U.S.) with maturity dates from February, 1997,
to June, 2001. Three debentures totalling $1-million (U.S.)
from this series were paid in full. The remaining two
debentures in the series totalling $1.75-million (U.S.) (the
debentures) had certain conversion features, and were
amended to mature in June, 1999. In addition, Jacobina
received a 2-per-cent net smelter royalty (the NSR) payable
after the first 50,000 ounces of gold production from zones A
and B of the Sabara property. Brazilian retained an option to
purchase the NSR for $1-million (U.S.) on or before 90 days
after the commencement of commercial production.
Subsequent to the June, 1997, closing of the purchase and sale
agreement with Jacobina, Brazilian determined that there were
certain material errors, omissions or inconsistencies regarding
the purchase that entitled Brazilian to refuse to pay the
remaining $1.75-million (U.S.) principal or any accrued
interest. In December, 1998, William and Jacobina filed the
civil action against Brazilian in the United States District
Court for the District of New Hampshire, alleging, among
other things, that Brazilian was obligated to make payments
under the debentures. In January, 1999, Brazilian filed
counterclaims against William and Jacobina alleging, among
other things, breach of contract, breach of duty of good faith
and fair dealing, and breach of fiduciary duty.
Brazilian, certain of its officers, and William and Jacobina,
and certain of their officers and creditors, have entered into a
settlement agreement and release in which the debentures,
marked discharged, and all rights under the NSR are to be
returned to Brazilian. All parties have agreed to dismiss the
civil action and the counterclaims.
According to Jeffrey C. Kirchhoff, chief financial officer of
Brazilian: "As of Dec. 31, 2000, there was $490,000 (U.S.) of
accrued interest on the books related to the $1.75-million
(U.S.) debentures, so this settlement reduces our current
liabilities by $2.24-million (U.S.). After careful re-evaluation
of the Sabara property, Brazilian has been aggressively
seeking operators as joint venture partners. We expect the
cancellation of the NSR and its $1-million (U.S.) option to
make the property more marketable. Furthermore, management
spent considerable time during the first quarter of 2001
renegotiating other debt, mostly related to our mining
properties. The successful resolution of this matter,
eliminating the uncertainty and expense of further litigation,
should allow us to conclude with other creditors, and expedite
new business development."
Brazilian thanks its outside counsel Jamie N. Hage of Nixon
Peabody LLP, Manchester, NH, and expert Ivan C. Machado,
PE, of Technomine Services, LLC, Salt Lake City, for their
patience and advice during the long course of this litigation. |
