PERTH, Australia, Nov. 22, 2013 /CNW/ - Mirabela Nickel Limited (Mirabela or the Company) (ASX: MBN) announced today that the British Columbia Securities Commission (BCSC) has issued a cease trade order (CTO) against Mirabela, due to the Company not filing by 14 November 2013, its interim unaudited financial statements for the third quarter ended 30 September 2013 and the associated management discussion and analysis (collectively, the Default Interim Filings). The CTO will remain in effect until the Default Interim Filings are filed in Canada and the Executive Director of the BCSC revokes the CTO.
Mirabela previously announced that one of its two customers, Votorantim Metais Niquel S.A. (Votorantim), had provided notice to Mirabela advising that its concentrate sales agreement with Mirabela (Sales Agreement) would terminate at the end of November 2013. The Sales Agreement was expected to run until the end of 2014. The Company took legal advice in respect of the purported termination of the Sales Agreement by Votorantim. Following receipt of this advice, discussions were held with Votorantim and Votorantim confirmed to the Company in writing that its purported termination of the Sales Agreement was invalid, that the Sales Agreement remains on foot, that it was committed to a minimum level of concentrate deliveries for the months of October and November and that it intends to comply with its obligations under the Sales Agreement until the end of 2014.
Votorantim has now claimed an event of force majeure under the Sales Agreement and that as a result, it is not currently obligated to purchase nickel concentrate from Mirabela pursuant to that agreement. The Company is taking legal advice on its position regarding a claimed force majeure and in particular the status of a force majeure when Votorantim closes its smelter at the end of November 2013 and ceases trying to remedy the cause of the claimed force majeure.
Mirabela's issues with Votorantim have placed significant stress on the operations at Mirabela's Santa Rita nickel mine and have the ability to have a detrimental impact on Mirabela's debt structures. The Company and its stakeholders are actively discussing potential ways of restructuring Mirabela's debt to reduce the burden on the Company. However, any restructuring of Mirabela's debts is complex as the Company and its advisors are required to deal across legal, financial, commercial and operational frameworks in three jurisdictions, being USA, Australia and Brazil. Accordingly, any potential restructuring transaction will have a high level of execution risk.
Currently, no binding agreements have been concluded nor has any opportunity or arrangement sufficiently progressed to be announced. No assurance can be given at this stage that any definitive agreements or arrangements will be reached with any party that the Company may be in discussions with.
As a result, despite the execution of the waiver and standstill agreements as announced on 14 November 2013, Mirabela has significant uncertainty regarding its future revenue, potential litigation and whether it will continue as a going concern. As a result, the Company defaulted on its interim filing obligations as it is currently not able to, among other things, estimate asset values and prepare financial statements with confidence that those financial statements will accurately represent the financial position of the Company and not contain a misrepresentation.
The CTO orders that trading in securities of Mirabela cease, but further states that a beneficial shareholder of Mirabela who is not an insider or control person at the date of the CTO may sell securities of Mirabela acquired before the order, if the sale is made through a market outside of Canada, and the sale is made through an investment dealer registered in British Columbia.
Following the receipt of legal advice and further assessment, the Company expects to be in a position to remedy the Default Interim Filings within 30 days.
SOURCE: Mirabela Nickel Ltd.
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Mirabela Nickel Limited
Telephone: +61 8 9324 1177