Telson Mining Corporation (CVE:TSN) (OTCMKTS:SOHFF) said Friday that it has inked a letter of agreement with Trafigura Mexico SA de CV which defines the terms under which Trafigura will provide Telson a waiver to repay an existing loan at a later deadline.
According to the main gist of the agreement, Trafigura has allowed Telson to defer “interests and principal payments” until June 30, 2021.
"Telson is very pleased to have received the cooperation of Trafigura in the negotiations to finalize the Letter of Agreement thereby obtaining Trafigura's waiver to a default under the loan agreements," said Telson CEO Ralph Shearing.
“The additional time now available of just under 16 months for our company to repay our loan debt to Trafigura, will allow Telson a reasonable time frame to achieve funding and finish construction of its robust 100% owned flagship asset, the Tahuehueto gold mine project," he added.
According to the terms, a waiver eliminates the loan agreements restriction on Telson for disposition of assets, if necessary, to generate cash to allow Telson to repay its loan obligations to Trafigura.
Meanwhile, Trafigura agreed to restructure the entire loan debt obligation if the Tahuehueto project is ramped up, or if Telson successfully raises money to fully fund the final construction and ramp-up the Tahuehueto Project. The agreement stipulates that in the second scenario, the funding amount and requirement for the ramp-up, would be “independently verified” by a “mutually acceptable” independent engineering consultant.
One of the material terms of the agreement also states that in partial consideration of the waiver granted by Trafigura, Telson will issue to Trafigura 12,000,000 warrants exercisable into a share for each warrant at an exercise price of $0.175 per share over a term of 36 months.
According to the pact, if Telson’s Campo Morado project, or Tahuehueto project are sold and it repays its total debt “under the loan agreements within the timeline proposed” the warrants will expire and be canceled.
Vancouver-based Telson's Tahuehueto mining project, located in Mexico’s north-western Durango state, is currently under construction and approximately 70% complete.
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