RE: Simmer and JacksFrom Aberdeen International report on April 14'th 2011
Simmer & Jack Loan Agreement - Update
On Feb. 16, 2009, shareholders of Simmer & Jack voted against the conversion to equity of the loan facility thereby granting Aberdeen a 1% life of mine NSR on all the northwest assets of the Buffels gold mines. Aberdeen has received and continues to receive the 1% royalty from both Simmer & Jack and First Uranium for the Buffels underground operation and the Mine Waste Solutions project, located in South Africa.
During fiscal 2010, Aberdeen filed a statement of claim against Simmer & Jack and against First Uranium seeking payment of the outstanding graduated royalty from Oct. 16, 2008, to Dec. 31 2008. Although a trial date was originally set for November 18, 2010 it has been postponed until October 22, 2011. The claim also included repayment of the unpaid loan principal for USD$10 million for a total of USD$11.4 million in claimed damages.
From Simmer and Jacks perspective
They reported a decrease of the Aberdeen contingent liability as a result of the revised production profile of BGM of R127.4 million. The 1% perpetual royalty obligation under the Aberdeen agreement is fair valued on a quarterly basis. The fair value of the royalty payable is determined with reference to the future cash flow to be generated from the production from BGM as per the latest BGM LOM. A new competent person’s report was completed during the current quarter that forecast a significant drop in the expected production from BGM., resulting in a credit of R127.4 million.