North of 60 Mining News - The mining newspaper for Alaska and Canada's North

Fortune Minerals Ltd. July 17 said it has reached a two-stage restructuring agreement with LRC-FRSM LLC (Lascaux) and its other secured creditors to settle its secured debt obligations.

In early July, Fortune subsidiary, Fortune Revenue Silver Mines Inc., the owner of the Revenue Silver Mine in southwest Colorado, received a default notice from Lascaux.

In addition to the Revenue Mine, the debt owed Lascaux was secured by Fortune's assets in Northwest Territories and Saskatchewan.

Following the default notice, Fortune and Lascaux negotiated a deal that satisfies the debt and allows Fortune to retain its Canadian assets, including the Nico gold-cobalt-bismuth-copper deposit in NWT. "We regret that the restructuring with our secured creditors has resulted in the loss of the Revenue Silver Mine in Colorado in which we have invested significant effort and funds over the past year," said Fortune CEO Robin Goad.

"However, upon completion of the restructuring, Fortune Minerals will be able to continue to operate with its Canadian assets intact and with manageable debt obligations that may be repaid through the exercise of warrants into Fortune common shares." The first stage of the agreement, which was completed on July 17, involves Fortune handing Fortune Revenue Silver Mines Inc. over to Lascaux.

In return, Lascaux released Fortune and its Canadian subsidiaries of all obligations under a short-term facility.

Additionally, Fortune Revenue Silver Mines Inc. paid Fortune US$200,000.

To help with the transition, Fortune has agreed to provide certain services and assist in the operation of the Revenue Silver Mine through the end of July.

The second stage of the restructuring, to be completed by Aug. 7, involves Fortune issuing C$5 million of unsecured seven-year term debentures to Lascaux and C$3.75 million to the other secured creditors.

The debentures will bear interest at 5 percent per year, accruing semi-annually and repayable at maturity.

Fortune also will issue 7.5 million Class A warrants and 21 million Class B warrants to Lascaux.

Class A warrant will be exercisable for one Fortune share at C15 cents and will expire in five years.

Each Class B warrant will be exercisable for one Fortune share at C25 cents and will expire in seven years.

The Class B warrants can only be exercised for the purposes of setting off or financing the repayment of an equivalent amount owing under the debenture held by the warrant-holder.

Lascaux will receive up to an additional 8,259,476 million Class B warrants which will be exercisable if, at the maturity of its debenture, Lascaux elects to exercise such warrants instead of being paid all or part of the interest due under its debenture.

Another 5 million Class A warrants and 14 million Class B warrants to the other secured creditors.

The debentures will be repayable in the event that NICO is sold, directly or indirectly.

During this second stage, Fortune Revenue Silver Mines Inc. is to pay an additional US$550,000 to Fortune.

All remaining security in Fortune and its subsidiaries' assets held by Lascaux and by the other secured creditors will be discharged.

Author Bio

Shane Lasley, Publisher

Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.

• Email: [email protected]
• Phone: (907) 726-1095
• https://www.linkedin.com/in/shane-lasley-ab073b12/