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Tuesday, 13 August 2013
Donner Metals mulling strategy after misses obligation at Bracemac-McLeod
Donner Metals (CVE:DON) continues to mull various strategies to ensure it meets its obligations, including funding its share of ongoing capital and operating costs at the Bracemac-McLeod mine in Quebec.
It comes after the company failed to make a cash call to the tune of $4.3mln under the 2011 development and operating agreement between the company and Glencore.
If Donner does not pay within 30 days, it will be in default of the agreement and Glencore (now Glencore Xstrata) will have the right to recoup any shortfall from Donner's portion of the proceeds from mine production, it said.
If that does not cover it, Glencore can choose to buy the firm's interest at fair market value or forgive the amount owing and convert Donner's interest in the Bracemac-McLeod mine to a 2% net smelter royalty (NSR), of which a 1% NSR royalty can be purchased by Glencore for $1 million.
"Donner continues to actively pursue various strategic alternatives encompassing potential financings in order to carry on with the development of its properties and to meet its various obligations.."it said today.
It cautioned however that there can be no assurance that funding will be available for the company or, if available, that it will be available on terms which are acceptable to Donner.