TORONTO, June 18, 2015 (GLOBE NEWSWIRE) -- Ivernia Inc. (collectively with its subsidiaries "Ivernia" or the "Company") (TSX:IVW) today provided an update on the business and the strategic review process of the Special Committee of the Board of Directors (the "Board") of the Company, which began in February 2015, and the extension of the forbearances with its primary lenders Sprott Resources Lending Partnership ("Sprott") and Enirgi Group Corporation ("Enirgi Group"). At their Annual General and Special Meeting of Shareholders taking place today at 10:00 am EDT, the Company will give a presentation and discuss the following topics and will also provide an operational update which will be made available on the Company's website.
Business Update
The Paroo Station Mine ("Mine") was placed on Care and Maintenance on January 16, 2015 amid difficult market conditions and a sustained depressed LME lead metal price environment. Mining operations ceased in January and milling ceased in early February. The Mine reached full Care and Maintenance status at the end of March and a qualified Care and Maintenance team remains on site. The LME Lead price deteriorated significantly towards the end of 2014 and remains volatile, currently trading in the $1,700 - $1,900 range. In addition to the depressed LME lead price, the Company continues to be faced with higher treatment charges. For the first quarter of 2015, treatment charges increased 25% when compared to the first quarter of 2014. The trend of increasing treatment charges is expected to continue during the remainder of 2015.
On March 10, 2015, the Company announced the filing of a new independent NI 43-101 Technical Report (the "Technical Report") which showed a year-over-year decrease in estimated Mineral Resources and Mineral Reserves and a shortened mine life. Further information on the Technical Report can be found on SEDAR at www.sedar.com.
Strategic Review Process
In light of the foregoing market conditions, in February 2015, the Board formed a Special Committee to formally review the strategic alternatives for the Company and to report to the Board. The Special Committee is led by Robert Metcalfe (Chair) and David Warner. The members of the Special Committee are independent of management and the Company's majority shareholder, Enirgi Group.
The strategic review process is ongoing, however, in light of market conditions over the past several months and the Company's current liquidity and working capital position, the Special Committee has made the following recommendations for immediate action:
- Consult with primary lenders to renegotiate debt repayment obligations which includes the extension of the forbearance periods.
- Seek to complete a business transaction, which may include, but are not limited to, a merger, sale of the asset, restructure, or any other potential value-maximizing transaction ("Transaction").
- Engage with interested parties that have identified themselves as potential buyers for, or partner with, the Company or the Mine and grant them access to the data room to initiate the process of evaluation of the Company and the operation.
Interested parties have executed non-disclosure agreements and are continuing to review information in the Company's data room. While this review process remains ongoing, there is no assurance that the Company will be able to successfully consummate a Transaction.
As part of its recommendations, the Special Committee has been in discussions with Ivernia's principal lenders and has reached an agreement with them for an extension of the five month moratorium on interest and principal repayments granted by them in February, 2015, while the Special Committee continues to conduct a financial and strategic review of the Company.
Extension of Forbearance under Sprott Facility
Ivernia was advanced CAD$20 million pursuant to a Credit Agreement with Sprott dated January 29, 2013, as amended on March 31, 2014 (the "Credit Agreement") and other related agreements (collectively, the "Sprott Facility"). CAD$5 million of the Sprott Facility was advanced to the Company for the purpose of funding a transportation bond in Western Australia (the "Bond"). As of June 17, 2015, the outstanding balance of principal and accrued interest (the "Outstanding Balance") under the Sprott Facility was CAD$13,994,694.
The Sprott Facility is secured by all of the Company's assets, including the Mine, and contains a number of events of default that, if triggered and called by Sprott, would grant Sprott certain rights and remedies, including rights to accelerate the payment of principal and/or to realize on its security.
As a result of entering into care and maintenance, the Company triggered a number of events of default under the Sprott Facility. Pursuant to a letter dated February 12, 2015, Sprott agreed, subject to certain exceptions, that it would not exercise its rights under the Sprott Facility with respect to certain events of default until June 30, 2015.
In June 2015, following the cessation of transport operations, the Company redeemed the Bond and Sprott notified the Company that it required repayment of the proceeds of the Bond in accordance with the terms of the Credit Agreement.
On June 17, 2015, the Company and Sprott entered into a forbearance extension agreement (the "Sprott Forbearance Extension Agreement") pursuant to which Sprott has agreed that it would not exercise its rights under the Sprott Facility, commencing from June 17, 2015 and ending on the earlier of: (i) November 15, 2015; (ii) the date a Transaction for Ivernia is completed; or (iii) the date on which the Transaction is reasonably determined to be terminated (the "Sprott Forbearance Period"). In consideration, Ivernia will pay Sprott a forbearance payment equal to the Bond proceeds, being CAD$4,750,000 (the "Forbearance Payment"), on or before June 22, 2015, with such Forbearance Payment being applied on account of the Outstanding Balance.
During the Sprott Forbearance Period, Sprott maintains the right to terminate the Sprott Forbearance Extension Agreement should certain limited events of default occur, including but not limited to, the Company becoming insolvent or bankrupt or there being a further unfavorable material change in the financial condition of the Company.
The Sprott Forbearance Extension Agreement allows for Sprott, at its option, to demand the Outstanding Balance under the Sprott Facility at the end of the Sprott Forbearance Period. Unless earlier terminated in accordance with the terms of the Sprott Forbearance Extension Agreement, the Outstanding Balance owed to Sprott on November 15, 2015 will be approximately CAD$9,668,605. As such, the maturity date under the Sprott Facility will be brought forward to the end of the Sprott Forbearance Period. All other terms and conditions of the Sprott Facility, will remain the same.
Extension of Forbearance under Enirgi Facility and Management Services Agreements
Ivernia issued a CAD$6 million promissory note dated June 29, 2012, as amended, to Enirgi Group. Pursuant to a letter dated February 13, 2015 ("Enirgi Forbearance Letter"), Enirgi Group agreed, subject to certain exceptions, to not exercise certain rights or remedies under the Enirgi Facility until June 30, 2015. In connection with Sprott entering into the Sprott Forbearance Extension Agreement, Enirgi Group has agreed to extend the terms granted to Ivernia under the Enirgi Forbearance Letter (which includes a suspension of payments under the management services agreements from the date of the Enirgi Forbearance Letter) until the end of the Sprott Forbearance Period.