Thistle announces debt restructuring plan



    Thistle Mining Inc. (AIM: TMG)

    TORONTO, April 11 /CNW/ - Thistle Mining Inc. ("Thistle" or the
"Company"), an AIM listed gold mining company, announces that it has entered
into a non-binding financial restructuring plan (the "Plan") with its major
creditors, MC Resources Limited ("MC") and Casten Holdings Limited ("Casten").
The Directors hope to request a restoration of the Company's AIM trading
facility as soon as a legally binding agreement is concluded.
    On 27 March 2007, both MC and Casten indicated in writing to Thistle that
they were not willing to defer payments of principal and interest due on
1 April 2007. The indebtedness due and payable on 1 April 2007 (assuming a
CAD$:US $ exchange rate of 1:1.1578) was estimated at US$24.74 million
comprising of US$12.371 million and US$12.369 million owing to MC and Casten
respectively. Pursuant to the terms of the credit agreements and related loan
notes, failure of Thistle to pay the 1 April payment in full constituted an
event of default. Upon the occurrence of an event of default, MC and Casten
are entitled under the credit agreements and related loan notes to immediately
accelerate and demand payment of all indebtedness and to enforce the security
that Thistle has granted to MC and Casten, including, without limitation, the
pledge of shares of Thistle's subsidiaries, including Toowong Mining BV
("Toowong") which holds an approximate 25.4% equity interest in CGA Mining
Limited (AUX:CGX) ("CGA"). The estimated total amount of indebtedness owing to
MC and Casten is US$51.99 million.
    On 10 April 2007, Thistle reached agreement with MC and Casten on the
restructuring of debt owing to them. In addition to being major creditors, MC
and Casten each own 35% of the outstanding shares of Thistle and as a result
are each a "related party" of Thistle for the purposes of Ontario Securities
Commission Rule 61-501 ("Rule 61-501"). Accordingly, the completion of the
Plan will constitute a "related party transaction" for the purposes of Rule
61-501. However, for the reasons outlined below, the completion of the Plan is
exempt from the formal valuation and minority shareholder approval
requirements of Rule 61-501 as Thistle is relying on the "financial hardship"
exemption described in Rule 61-501. The Plan includes:

    
    i.   Transfer of Shares of Thistle's 100% interest in Toowong to MC and
         Casten or transfer of the shares in CGA to MC and Casten for US$21.0
         million. Toowong holds 40,985,538 CGA shares acquired as part of the
         recent transaction whereby Thistle sold its interest in the Masbate
         project in the Philippines to CGA (the "CGA Transaction").
    ii.  Assignment of or undertaking to pay when due amounts payable to
         Thistle to MC and Casten for US$4.5 million (the "Deferred
         Payment.") Under the terms of the CGA Transaction, US$1.0 million
         and US$4.0 million (less in each case any amount(s) which are
         required to meet any substantiated warranty and indemnity claims
         that may be made by CGA) are to be paid to Thistle on dates not
         later than 20 August 2007 and 20 March 2008, respectively. Under the
         Plan, notwithstanding the assignment by Thistle of its right to the
         Deferred Payments to MC and Casten, the sole responsibility and
         liability for any and all CGA claims shall remain with Thistle.
    iii. Commitment to underwrite in full a private placement for
         approximately 44.45 million shares at 20 pence per share by both MC
         and Casten at no fee ("First Private Placement"). The First Private
         Placement will raise approximately US$17.3 million before charges.
         The First Private Placement is to be made to MC and Casten, pro rata
         to their existing shareholdings, and select qualified investors in
         the UK. The 20 pence per share represents the average Thistle share
         price between the announcement of the shareholder approval of the
         CGA Transaction on 19 March 2007 and 28 March 2007 (the day
         preceding the suspension of trading of Thistle stock on AIM). In the
         event that no other investors subscribe for the Thistle common
         shares pursuant to the First Private Placement, MC and Casten will
         each increase their holding in Thistle from 35% to an estimated
         42.35%. MC and Casten will satisfy their payment obligations for the
         subscription of Thistle shares by converting their principal debt
         outstanding into such shares, except that MC and Casten will pay
         cash (in equal amounts) to the extent they are required to fund the
         use of proceeds described in (ii) and (iii) below.

    The Plan is designed to significantly improve Thistle's financial
position. Following implementation of the plan, Thistle's principal business
will continue to be the operation of a gold mine owned by the President Steyn
Gold Mine (Free State) Proprietary Ltd. ("PSGM"), a South African subsidiary
of Thistle. The proceeds of the Plan will be applied as follows:

    i.   the US$21.0 million consideration for the transfer of Towoong shares
         or CGA shares and the US$4.5 million Deferred Payment will be
         applied to repay the principal amount of outstanding CCAA debt owed
         by Thistle to MC and Casten. The application by Thistle of such
         consideration will be coupled with the conversion by MC and Casten
         of principal debt owing by Thistle as part of the First Private
         Placement. The total principal amount outstanding as at 1 April 2007
         was US$39.498 million;
    ii.  approximately US$1.586 million of the net proceeds of the First
         Private Placement is intended to be used to replace cash held on
         deposit and to assume certain bank suretyship and pledge obligations
         that have been provided by Thistle Holdings to Standard Bank of
         South Africa Limited on behalf of PSGM in respect of various trade
         creditors; and
    iii. the balance of the net proceeds of the private placement of
         approximately US$1.750 million in cash will be used to fund
         Thistle's budgeted working capital requirements for the remainder of
         2007. While the board of directors of Thistle considered the amount
         raised to be adequate based upon an internal assessment of cash flow
         requirements, it has not obtained an independent verification by
         external auditors of Thistle's working capital needs for 2007.
         Future cash flows are subject to a number of risk factors, most
         significantly, the performance of PSGM, the gold price and ZAR:US $
         exchange rates. Depending on these and other factors, the board
         recognizes that it may be necessary for Thistle to raise further
         funds during 2007. There is no assurance that Thistle will be
         successful in its future fundraising efforts. The internal working
         capital assessment assumes that gold production from PSGM for 2007
         is anticipated to be 144,000 oz at a cash cost and total cost of
         $565 to $575 per oz and $597 to $610 per oz respectively assuming an
         exchange rate of 7.30 South African rand per US $. These production
         and cost metrics are comparable to that achieved for 2006.
    

    Following completion of the repayment of the principal debt owed to MC
and Casten, Thistle will continue to owe deferred interest and fees to MC and
Casten ("Remaining Indebtedness") which amounts to CAD$6.892 million and
US$6.539 million as at the date hereof. The blended interest rates for this
debt at current exchange rates amounts to approximately 11.33% per annum.
    A second private placement ("Second Private Placement") is contemplated
under the Plan whereby the consideration for shares shall be paid by MC and
Casten by way of set-off against the Remaining Indebtedness. The Second
Private Placement is however subject to a change in domicile of Thistle out of
the Province of Yukon (the "Continuance"), which is expected to be considered
by the shareholders of Thistle at the next shareholders meeting currently
scheduled for July 2007 (the "Thistle Meeting"). The subscription price of the
shares under the Second Private Placement will be equal to the weighted
average closing price per Thistle share on AIM for the 10 trading days
immediately prior to the second business day prior to the completion of the
Second Private Placement (or such other price as is agreed to by Thistle, MC
and Casten). There is however no assurance that the Continuance or the Second
Private Placement will be undertaken as the Continuance remains subject to
further analysis by Thistle, MC and Casten.
    Under the Plan, the payment of the interest on the Remaining Indebtedness
is to be deferred until the earlier of 1 April 2008 and the completion of the
Second Private Placement and thereafter shall be payable quarterly on
31 March, 30 June, 30 September and 31 December in each calendar year. Such
interest shall be compounded quarterly in arrears on 31 March, 30 June,
30 September and 31 December in each calendar year. The payment of the balance
of the Remaining Indebtedness is to be deferred until the earliest of 1 April
2010 or the date of the occurrence of certain events including:
    
    -  the (direct or indirect) sale, disposal, transfer, scheme, plan,
       consolidation, amalgamation, merger, compromise, arrangement,
       distribution or situation of or involving Thistle or all or
       substantially all or a majority of the assets or rights of Thistle
       and/or its subsidiaries or which results in a change in control of
       Thistle;
    -  completion of the Second Private Placement or any other private
       placement, rights issue or fund raising;
    -  any event of default in relation to any of the Remaining Indebtedness
       or under any loan or facility agreement to which Thistle or any of its
       subsidiaries is a party from time to time;
    -  any legal or other proceedings being commenced against Thistle or any
       of its subsidiaries for the repayment of any debt or amount due, or
       for execution against (or the perfection of any security in respect
       of) any of its or their respective assets, or any corporate action or
       legal proceedings are commenced for the winding-up, dissolution,
       administration, receivership, liquidation, bankruptcy, re-organization
       or similar event relating to or involving Thistle, any of its
       subsidiaries or any of their respective revenues, assets or rights; or
    -  any breach, in any material respect, occurring or reasonably likely to
       occur in respect of any of the terms or conditions of the Plan.
    

    As disclosed above, the completion of the Plan constitutes a "related
party transaction" under Rule 61-501. Thistle is relying on the "financial
hardship" exemptions from the formal valuation and minority shareholder
approval requirements of Rule 61-501. The Directors, with the exception of any
director who is involved in the transaction as a related party, (the
"Independent Directors") have each unanimously determined that (i) Thistle is
in serious financial difficulty, (ii) the terms of the Plan are designed to
improve Thistle's financial position and (iii) the terms of the Plan are
reasonable in the circumstances of Thistle. The Independent Directors have
consulted with the Company's nominated adviser and believe that the Plan is in
the best interests of the Company and shareholders as a whole. If the Plan is
not completed, the Independent Directors believe the Company will be unable to
meet its financial commitments as they fall due and consequently will be
unable to continue to trade. In this event, the Major Creditors will utilise
any legal means necessary, including appointment of a receiver, liquidator or
administrator to realise upon their security interests.
    The Plan also constitutes a related party transaction for the purposes of
the AIM rules. As such, the Independent Directors have concluded that,
following consultation with the Company's nominated adviser, Grant Thornton,
the terms of the Plan are fair and reasonable insofar as Thistle's
shareholders are concerned. In giving its advice, Grant Thornton has taken
into account the directors' commercial assessment.
    Completion of the Plan is subject to certain customary conditions
including but not limited to the execution of definitive documentation by the
parties and receipt of all necessary approvals, including any required
regulatory approvals and consents of CGA, in each case by 22 April, 2007 (or
such other date as may be agreed to by the parties). In addition, certain
aspects of the Plan may close less than 21 days after the filing by Thistle of
a material change report concerning the Plan due to Thistle's immediate need
for financing in order to carry on its business and achieve its business
objectives.

    This news release contains forward-looking statements with the meaning of
applicable securities laws including amongst others, statements made or
implied above relating to the Company's objectives, strategies to achieve
these objectives, future cash flow and financing requirements, and similar
statements concerning anticipated future events, results, circumstances,
performance or expectations that are not historical facts. Such
forward-looking statements reflect the Company's current beliefs and are based
on information currently available to management. These statements are not
guarantees of future performance and are based on the Company's estimates and
assumptions that are subject to risk and uncertainties inherent in the
business of the Company including those discussed in the Company's materials
filed with the Canadian securities regulatory authorities from time to time,
which could cause the actual results and performance of the Company to differ
materially from the forward-looking statements contained in this news release.
Those risks and uncertainties include, among other things, risks related to:
the mining industry (including operational risks in exploration development
and production; delays or changes in plans with respect to exploration or
development projects or capital expenditures; the uncertainties involved in
the discovery and delineation of mineral deposits, resources or reserves; the
uncertainty of mineral resource and mineral reserve estimates and the ability
to economically exploit mineral resources and mineral reserves; the
uncertainty of estimates and projections in relation to production, costs and
expenses; the uncertainty surrounding the ability of the Company to obtain all
permits, consents and authorizations required for its operations and
activities; competition for the acquisition, exploration and development of
mineral interests; and health and safety and environmental risks), the risk of
gold and other commodity price and foreign exchange rate fluctuations; the
ability of the Company to fund the capital and operating expenses necessary to
achieve the business objectives of the Company; the uncertainty associated
with commercial negotiations and negotiating with foreign governments; the
risks associated with international business activities; the dependence on key
personnel; the ability to access capital markets; the indebtedness of the
Company; and labor relations matters. Material factors or assumptions that
were applied in drawing a conclusion or making an estimate set out in the
forward-looking statements include that the general economy remains stable,
the demand and price of gold continues to increase and the Rand remains strong
against the US$. It is also assumed that there will be no major disruptions in
production including failure of infrastructure, seismic activity, underground
fires and labor unrest. The Company cautions that this list of factors is not
exhaustive. Although the forward-looking statements contained in this news
release are based upon what the Company believes are reasonable assumptions,
there can be no assurance that actual results will be consistent with these
forward-looking statements. All forward-looking statements in this news
release are qualified by these cautionary statements. These forward-looking
statements are made as of the date hereof and the Company, except as required
by applicable law, assumes no obligation to update or revise them to reflect
new information or the occurrence of future events or circumstances.





For further information:

For further information: Andy Graetz, Chief Financial Officer at + 27 82
929 5562 or email to agraetz@disselgroup.com; Gerry Beaney, Grant Thornton
Corporate Finance at +44 (0) 207 383 5100

Organization Profile

THISTLE MINING INC.

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