JOHANNESBURG (Business Day) -- Shares of Thistle Mining [AIM:TMG], the London AIM-quoted company that owns the President Steyn Gold Mine near Welkom in the Free State, were suspended from trade yesterday when the company's major creditors indicated they were not willing to defer payments due on April 1.
The suspension of the shares, at $18.50, was requested by the company's directors until the matter was resolved.
Thistle chief financial officer Andy Graetz said yesterday the mine was still operating and he was hopeful that an arrangement could be reached with the creditors -- who together own 70% of Thistle's shares -- within the next week.
This is the second time in two-and-a-half years that Thistle has hit a crisis with its creditors, although it successfully negotiated new terms previously.
The previous crisis arose in late 2004 when Standard Bank declared that Thistle was in default after the strength of the rand and production shortfalls at President Steyn led to a cash squeeze. An accommodation was reached which resulted in Casten Holdings and MC Resources holding 70% of Thistle.
Thistle recently sold its stake in the Masbate project in the Philippines to CGA Mining for $51 million, of which $21 million was payable in CGA shares and the remainder in cash. It used $26.7 million of the cash to repay part of the debt owing to Casten and MC Resources. But another $24.7 million is due to the two shareholders on April 1, and if it is not paid, they are entitled to demand payment of all indebtedness and enforce the security for the debt. The security is all of Thistle's assets, including the CGA shares and the President Steyn mine.
Thistle's total indebtedness, before the $26.7 million payment to its two major shareholders, was about $80 million, Graetz said, which means the balance outstanding is $53 million. That sum was due over two years and at this point, the President Steyn mine is not generating enough cash to repay it, so a reorganisation of the balance sheet is needed.
According to Thistle's latest financial report for the September quarter, its operations generated $2.9 million in cash for the nine-month period. It expected to sell 147,800 ounces of gold last year, revised down from a previous estimate of 157,500 ounces, because of a fall of ground, a decision to terminate unprofitable production at one section and production problems in another section.
Late last year Thistle completed the introduction of a black empowerment consortium, Lefa La Gauta, as shareholders in President Steyn, with a 15% stake.
