Wednesday, December 1, 2021

Troubled DML declares insolvency

Discovery Metals Limited (DML) was on Friday declared insolvent and forced to go on voluntary administration after its financiers demanded immediate repayment of money owed. As a result, the troubled Australian junior copper miner appointed Stefan Dopking and Michael Ryan of FTI Consulting as Voluntary Administrators of the company under Part 5.3A of the Corporations Act.
“DML’s Lender Group has demanded full and immediate repayment by DML of all monies (comprising principal repayments, interest and costs),” the company said in a statement.
The move has put several jobs on the line as the mine could be forced to close as financiers look to recoup their money. DML has also earlier seen a possible transaction with Cupric Canyon Capital LP; a Barclays supported private equity firm collapse. The miner recently announced that it had entered into a US$110 million investment deal with Castlepines Global Equities Limited in which the international equity fund would acquire a 34 percent stake in Discovery Copper Botswana (DCB).
DCB is a subsidiary of DML, which owns the contentious Boseto mine near Maun. Part of the proceeds from the investment was expected to go towards negotiating a settlement of the existing loan finance facility with the company’s secured lending syndicate. However, DML said following provision of the Memorandum of Understanding (MOU) to the Lender Group, it received a Notice of Event of Default dated 10 February 2015 from the Lender Group advising the execution of the MOU by the company was a likely breach of the Amended and Restated Facility Agreement dated 13 July 2015. The company then disputed the position taken by the Lender Group in this Notice of Event of Default.
“As a result of the Notice of Event of Default dated 10 February 2015, Cupric also issued a “Notice of Default and Reservation of Rights” notice, claiming breach of the Facility Agreement between the Company and Cupric dated 13 February 2015. Cupric is provided with a right to issue a notice of default via the Priority Deed pursuant to the “Cross Default” provisions.”
The company revealed in a statement that the lenders maintain that it remains in default of the Restated and Amended Facility Agreement with the lending syndicate dated 13 July 2014 and the Facility Agreement with Cupric dated 28 November 2014. Therefore, the company said it is unable to remedy these defaults.
“DML’s Lender Group has now demanded full and immediate repayment by DML of all monies (comprising principal repayments, interest and costs),” Discovery Metals said on Friday.
“Accordingly, the Board of Directors of the Company considers the Company to be insolvent or likely to be insolvent due to the above-stated matters.”

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