GBM cancels A$10m loan agreement with NFC
PERTH (miningweekly.com) – A A$10-million loan agreement to fund the development of the Mt Coolon gold project, in Queensland, has been terminated, ASX-listed GBM Resources has reported, sinking a merger opportunity with a Canadian junior.
The company in October last year entered into the loan agreement with UK-based National Federal Capital (NFC), which had been scheduled to pay a first tranche of A$5-million by November 21, and a second tranche by the end of February.
To date, NFC has advanced A$1.5-million to GBM, which was received in December, with the remaining monies to be settled by the end of March.
However, GBM has now told shareholders that there was no certainty that NFC would be able to complete its obligation without further extensions to the loan agreement settlement date.
As a result of the termination of the A$10-million loan agreement, the proposed merger with Canada’s WCB Resources will also no longer proceed, as GBM is unable to meet its financing precondition to secured the required debt funding of A$8.5-million by the end of March.
GBM told shareholders that, while the merger agreement has been terminated, the company will continue to seek alternative funding and should the appropriate funding be secured, the two companies will consider reopening merger discussions.
Under the terms of the proposed merger, WCB shareholders would have received eight GBM shares for each WCB share held. The Canadian firm’s shareholders would have held a combined 36% interest in the enlarged company and GBM shareholders the balance if the deal is completed.
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