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Telson Mining and Nyrstar Canada agree to restructure debt obligations, removing loan from default status

Nyrstar will conditionally waive the mining company’s default status from a June 2018 loan agreement between the two companies

Telson Mining Corporation -
Telson acknowledged its default status and agreed to accept Nyrstar into a Trust Agreement with Trafigura Mexico

Telson Mining Corporation (CVE:TSN) (OTCMKTS:SOHFF) has reached an agreement with Nyrstar Canada (Holdings) Ltd that removes its loan from default status, the company announced Thursday.

Nyrstar has agreed with Telson to conditionally waive the mining company’s default status from a June 2018 loan agreement between the two companies.

Under the terms of the agreement, Telson acknowledged its default status and agreed to accept Nyrstar in a Trust agreement with Trafigura Mexico SA de CV, granting Nyrstar full security subordinate to Trafigura and any new lenders that may provide debt funding for Telson’s Tahuehueto mine construction.

READ: Telson Mining moving closer to finishing Tahuehueto mine after funding alliance with Accendo Banco

In April, Telson agreed to transfer its Campo Morado and Tahuehueto assets to a trustee to secure its Trafigura loan obligation. In return, Trafigura waived Telson’s defaults and deferred interest and principal payments until June 30, 2021.

The trust is in the process of being established, Telson told shareholders.

"Telson Management is very pleased to have successfully negotiated and executed both the Nyrstar letter agreement and the Trafigura letter agreement to bring the company out of its respective loan default status and conditionally defer interest and principle payments to June 30, 2021,” CEO Ralph Shearing said in a statement.

Telson recently signed a US$12 million medium term loan facility with Accendo Banco to restart construction at Tahuehueto, which is located in Mexico. All efforts are being made to assist Accendo's due diligence to allow this loan to close and restart construction at the gold mine, Shearing added.

Restructured obligations

The agreement with Nyrstar also eliminates its loan agreement restriction on Telson for the disposition of assets, if necessary, to create cash flow for Telson to repay its loan.

Nyrstar also agreed to restructure Telson’s debt load and update cash flow projections in three cases: if the Tahuehueto project is ramped; Campo Morado is able to make payments of $300,000 for at least six consecutive months on a pro rata basis, based on outstanding amounts due to Nyrstar; or Telson successfully raises sufficient financing to fully fund the final construction and ramp up of Tahuehueto, with funding amount and requirements for effective ramp up to be independently verified by a mutually acceptable independent engineering consultant.

Nyrstar will cease to be a beneficiary in the trust if Telson repays its total debt.

The Tahuehueto project is located in Durango near the New Mexico border. Construction has advanced to an estimated 60-to-70% of completion and the company aims to have it all completed in 2021.

Contact Angela at angela@proactiveinvestors.com

Follow her on Twitter @AHarmantas

Quick facts: Telson Mining Corporation

Price: 0.24 CAD

Market: TSX-V
Market Cap: $43.86 m

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Telson Mining Corp finishes trust agreement with Trafigura Mexico

Telson Mining Corp (CVE: TSN-OTC: SOHFF) President and CEO Ralph Shearing joined Steve Darling from Proactive with news the company has completed a trust with Trafigura Mexico. That agreement says Trafigura waived all defaults plus deferred, all principal and interest payments until June 30,...

1 week, 5 days ago

3 min read