by eyetee | October 26, 2012 5:44 pm
Shear Diamonds says it has defaulted on certain terms of the credit agreement between it and Taché Co.
The news comes just over a month after Shear announced it had suspended production of high-grade stockpiles at its Jericho mine in Nunavut due to a drop in world diamond prices.
“Taché has confirmed to Shear [its] current intention is to try to continue to work with and support Shear’s efforts to enter into a transaction (whether financing, joint venture, sale, or otherwise) that will either allow it to advance its Jericho project or to otherwise realize value for its stakeholders,” Shear said in a press release.
“Given Shear’s limited funds and significant obligations, [its] management and directors have sought to reduce [its] payments wherever possible while focusing on payments required to maintain the project in good standing. Diamond and financial market conditions continue to make it difficult for Shear to secure financing or other transaction. There can, therefore, be no assurance an appropriate transaction will be found.”
Part of the deal between the two companies has Taché providing debt financing that includes a $2-million US term loan repayable in 12 equal monthly installments once Shear starts receiving proceeds from the sale of existing Jericho stockpiles.
Taché says it has given Shear “notice of intention to enforce security.”
Shear also announced its board director, Gregory Rieveley, had resigned due to professional commitments at another company.
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