Telson Mining Corporation., - CEO, Ralph Shearing
CEO, Ralph Shearing
Source: YouTube (Metals Investor Forum)
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  • Telson Mining (TSXV:TSN) has agreed to new terms regarding its loan deal with Trafigura Mexico
  • The companies have agreed to a new deal, which no longer requires assets disposal if Telson doesn’t meet its payment schedule
  • Two Telson mining projects will have ownership transferred to a trust, with rights released upon satisfaction of new conditions
  • Neither company has stated if this is related to COVID-19
  • Telson Mining (TSXV:TSN) is holding steady, trading at 10 cents per share and a C$15 million market cap

Telson Mining (TSXV:TSN) has agreed to a waiver of loan terms with Trafigura Mexico for their 2017 loan agreements.

The Toronto-based Mexican gold and silver miner agreed to take on loans from Trafigura in 2017. Now, the company has just rejigged the terms of those loans to avoid a default.

Neither company have stated if this decision is COVID-19 related. However, the changing of terms is almost certainly the result of the changing market which COVID-19 has caused.

Trafigura has provided its approval and consent, allowing Telson to avoid a cause for default. The company has done so by granting Telson a waiver, forgoing defaults under the Loan Agreements, and deferring interests and principal payments until June 30, 2021.

The waiver eliminated the loan agreement restrictions on Telson for disposition of assets, if necessary, to generate cash to allow Telson to repay its loan obligations to Trafigura.

Trafigura has agreed to restructure the entire loan debt obligation, under terms and conditions which both parties will negotiate. The terms will be based on market conditions and updated cash flow projections, which confirm the project’s financial viability.

If the Tahueheto project is ramped up, that would constitute financial viability. There are conditions within the new agreement regarding how much of a ramp up is required to fulfil terms. However, if the project materially advances, then Telson will not be in default of the loan.

The new deal requires Telson to secure funding within the next year to either fully satisfy the loan, or fully fund costs of production onsite.

Per the agreement, Telson must also transfer two of its project to a trustee, to secure the full loan repayment. The trust will hold all assets in the Campo Morado Project, and the Tahueheto gold mine project. If Telson repays the total debt due to Trafigura under the loan agreements, the trust will terminate. Subsequently, all the assets held within will return to Telson.

Telosn’s President said that the company was pleased by Trafigura’s cooperation in negotiations to finalise a waiver preventing default.

“The additional time now available for our company to repay our loan debt, will allow Telson a reasonable time frame to achieve funding and finish construction of its robust 100 per cent owned flagship asset, the Tahueheto gold mine project,” he said.

Telson Mining (TSXV:TSN) is holding steady, trading at 10 cents per share at 2:39pm EST.

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