A recently completed debt swap and a private placement increases Adolf Lundin’s interest in South Atlantic Ventures (VSE) to 62.5%, or about 15.3 million shares.
The company, along with 30% joint venture partner Continental Materials, owns the Oracle Ridge underground copper mine near Tucson, Ariz. The project has been plagued with operational problems since entering production in early 1991 with a US$6.1 million loan from French bank Societe Generale.
Following up a $2-million loss in the fiscal year ended Oct. 31, 1991, South Atlantic reported a loss of more than $660,000 in the first nine months of fiscal 1992.
Operating losses at the mine left the partnership unable to meet interest or principal payments on the bank debt and as a result, the project went into default.
Continental and Adolf Lundin, a director of South Atlantic, purchased the bank debt late last year for US$1 million.
Lundin has made other advances to the company and converted an aggregate amount of $1.3 million, including the loan purchase cost, into South Atlantic stock.
Lundin received 2.89 million shares at a deemed price of 15 cents each for $434,000 of the debt and 5.79 million units at 15 cents each for the remainder. The units include a share plus a warrant exercisable at 15 cents in the first year and 20 cents in second year.
Lundin also purchased, through a private placement, 3.33 million units at 15 cents each to fund ongoing costs at the Oracle Ridge operation. The units include a share plus a warrant exercisable at 15 cents in the first year and 20 cents in the second year.
If Lundin exercises all his purchase options, his shareholding will increase to about 24.4 million shares, or about 72.7% of the company’s outstanding shares.
South Atlantic has replaced management personnel at the
Oracle Ridge mine and hopes to produce about 12 million lb.
copper this year at an average cost of about US70 cents per lb.
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