Meridian Capital acquires Thistle debt (November 08, 2004)

Standard Bank London and the Standard Bank of South Africa have sold their interests in certain senior finance documents, including a senior credit agreement with Thistle Mining (THT-T) to Meridian Capital.

On Oct. 28, Standard Bank notified the miner that it had defaulted on debt repayment; the notice of default has been withdrawn under the latest agreement.

Thistle says Meridian plans to negotiate a recapitalization of Thistle, but that no assurances can be made as to the success of such a proposed restructuring. Meridian retains all the rights of a lender under the senior finance documents.

In early October, Thistle announced the commencement of production from the Minkie Block of the Eldorado Massives zone at the company’s President Steyn gold mine in South Africa.

The company also said it had begun installing trackless, remote-controlled loading equipment with the goal of more than tripling production to 250 tonnes per day.

Said Thistle’s president William McLucas: “This is an important step in the plan to return the business in South Africa to profitability through the extraction of greater tonnages of higher-grade ore.”

In mid-August, Thistle admitted in its second-quarter financial results that at present, its cash resources were "insufficient to finance the operations beyond the very near term, in the absence of improved mining results and significantly, more favourable exchange rates." The company cited the strength of the South African rand and the underperformance of its mining operations as contributing factors.

During the three months ended June 30, Thistle lost US$12.2 million (or 3 per share) on revenue of US$18 million, compared with a year-earlier loss of US$4.4 million (2 per share) on US$19.3 million.

Thistle’s second-quarter gold sales amounted to 41,268 oz., down from 45,930 oz. in the same quarter last year. The decrease reflects a change in the mine plan, which saw mining ceased at several low-grade areas. The change also boosted the company’s recovered grade to 4.4 grams gold per tonne from 4 grams in the first quarter.

Shares in Thistle are currently trading at around 6 — near the low end of the issue’s 52-week trading window of 4-50 on the Toronto Stock Exchange.