LONDON (ShareCast) - (Sharecast News) - Brazil-focussed mining and development company Serabi Gold has agreed amendments to the subscription deed that it entered into with Greenstone on 21 January, it announced on Friday, in connection with the issue of up to $12m of convertible loan notes .
The AIM-traded firm said that, as a result of the uncertainties caused by the Covid-19 coronavirus pandemic, it agreed with Greenstone to extend the period for the satisfaction of all the conditions necessary for the completion of the subscription for and issue of the notes that was announced on 22 January, and was approved by shareholders on 26 February.

It said that itself and Greenstone had now signed an amendment deed, varying the original subscription deed.

Serabi had already reached an agreement with Equinox Gold to extend the payment period for the final $12m instalment for the purchase of the Coringa gold project.

Under the revised terms agreed with Equinox, the company said it would start to make instalment payments of $0.5m per month, payable on 1 May, 1 June and 1 July 2020, which would increase to $1m per month after that until there are no international travel restrictions imposed by the Brazilian authorities, and also no travel restrictions within or into the state of Para.

Once the travel restriction condition is satisfied, the balance outstanding would be settled within six weeks.

Serabi said that under the amendment deed, certain terms of the subscription with Greenstone had been amended, including that the company could, before the satisfaction of the travel restriction condition, only submit a subscription request in respect of convertible loan notes in the amount of $0.5m each month.

Following the satisfaction of the travel restriction condition, it could then issue further subscription requests for amounts of no less than $0.1m and no more than $12m, less the sum of the aggregate principal amount of all notes outstanding at that time.

Until the existing secured loan due to Sprott Resource Lending Partnership has been repaid, the convertible loan notes would be unsecured and subordinated to the Sprott Loan.

The Sprott Loan was about $3.45m as at 31 March, and was due to be repaid in three equal monthly instalments ending 30 June.

Following settlement of the Sprott Loan, Serabi said the security interests of Sprott would be discharged, and it would grant to Greenstone the security package as originally envisaged, save that a pledge of the shares of Chapleau Resources (CRL) would continue to be held by Equinox until the Coringa deferred consideration is settled in full.

CRL holds 100% of the shares of Chapleau Explora??o Mineral, which in turn holds the exploration licences for the Coringa gold project.

The period during which the firm could issue an issue notice to Greenstone expires on 31 December, unless otherwise agreed.

Subject to Greenstone not having exercised its option to convert the amount outstanding into conversion shares, Serabi said the convertible loan notes were due to be repaid 16 months after the first Issue date, which was expected to be 30 April.

The underlying conversion price at which Greenstone could convert any outstanding amount into ordinary shares had not been varied, the company confirmed, and remained at 76p per ordinary share.

Greenstone would be able to convert any outstanding convertible loan notes at any time.

Serabi Gold said its cash holdings at the end of March totalled $9.15m, having made payments during the first three months of principal and interest in respect of the Sprott Loan of 2020, totalling $3.7m.

"As I have stated previously, the company and its board is extremely grateful for the continued support of Greenstone and the understanding and flexibility shown by Equinox," said chief executive officer Mike Hodgson.

"It goes without saying we are living testing times, but we are delighted that we have nonetheless been able to put in complete a very workable solution for the company to complete the acquisition of Coringa which is key to the growth plans of Serabi."

Hodgson said that, following a record month of production for March, the operations were continuing to perform well, and the staff on site were demonstrating "true resolve and dedication" for which he was grateful.

"This continued support from Greenstone in what are extremely challenging and uncertain times is a major endorsement and strong confirmation of the belief of Greenstone and its management in the longer term prospects for Serabi and the potential growth that not just Coringa will bring to the Company but can also be generated from the opportunities to expand existing production from the Palito Complex, particularly through successful exploration in and around the Sao Chico deposit."

At 0901 BST, shares in Serabi Gold were ip 10.46% at 83.4p.

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