PERTH (miningweekly.com) – Gold developer Aurelia Metals has signed an agreement with diversified miner Glencore, settling their legal disputes. The major has also agreed to provide an additional A$21.5-million in funding to Aurelia.

Since June, Aurelia and Glencore have been caught in a dispute over the repayment of about A$120-million in facilities provided by Glencore to Aurelia. The dispute resulted in legal action, after Glencore appointed administrators to Aurelia, claiming that the ASX-listed company was insolvent.

The New South Wales Supreme Court held a hearing in early November, but has reserved judgment.

With the parties now agreeing on a legally binding term sheet, Glencore and Aurelia had jointly applied to the Supreme Court to have the current court proceedings adjourned.

Under the new agreement, all existing debt repayments to Glencore had been deferred for at least two years, and all interest had been suspended on the current and new senior finance facilities for a period of two years.

Glencore would also provide additional funding of A$21.5-million to support Aurelia through additional loans and credit support, while Aurelia would maintain conversion rights of up to A$77-million of the facilities at the end of the two-year deferral period.

Aurelia told shareholders on Friday that the agreement provided the company the opportunity to stabilise and rectify the issues associated with its Hera processing plant, in New South Wales, and to work collectively through the business plan to deliver a sustainable operation at Hera.

“Aurelia welcomes the agreement, as it sets aside the considerable legal and financial uncertainty around the company, while providing a net A$21.5-million funding together with a substantial deferral of existing debt repayments and interest,” said CEO Rimas Kairaitis.

“Aurelia can now proceed with the rectification and optimisation of the Hera project, and position the business for growth.”

The Hera project poured its first gold in September last year, but the project was yet to reach its design performance. The underperformance of the project to date had had negative impacts on Aurelia’s financial performance, cash flow and liquidity.