13/02/2014 - 14:42

EMA confirms Young as CEO

13/02/2014 - 14:42

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Mike Young has been confirmed as the new chief executive of Energy and Minerals Australia as a condition of a deal to secure more debt funding for the uranium explorer.

Energy and Minerals Australia chief executive Mike Young.

Mike Young has been confirmed as the new chief executive of Energy and Minerals Australia as a condition of a deal to secure more debt funding for the uranium explorer.

Mr Young, who was appointed non-executive chairman of EMA in April last year, replaces current chief executive Julian Tapp.

Mr Tapp, a former head of government relations at Fortescue Metals Group, will move into the role of chief operating officer.

The management restructure has been forced by a complex funding deal between EMA and its convertible noteholders.

EMA told the market last month it had secured short-term funding of $2.65 million from the noteholders, allowing it to continue development of its Mulga Rock uranium project.

The deal came after months of negotiations between EMA and Acorn Capital, Macquarie Bank and the Element Resources Fund.

A condition of the deal was that Mr Young accept the role of full-time executive director of the company.

In a statement today on the management restructure, Mr Young downplayed the significance of the change.

"I have been working closely with Julian since joining the company in April 2013 and moving to the executive role is simply a natural progression as we ramp up the project and the company," he said.

"He will continue to run the project while I focus on the company so really, nothing will have changed except for our business cards."

Today's statement referred to earlier announcements by the company on its funding negotiations but did not explain the circumstances of the management change.

Mr Young, who came to prominence as the chief executive of BC Iron, remains a non-executive director at the iron ore miner and is also non-executive chairman at Cassini Resources.

He will continue as acting EMA chairman until the board appoints a new chairman.

Under the terms of the financing arrangement, EMA's noteholders will provide a $2.65 million secured loan in the form of promissory notes, repayable on March 31.

EMA will meanwhile seek to raise $10 million through a private share placement.

Upon successful completion of the equity raising, EMA will issue shares to repay the $2.65 million loan, as well as an existing $950,000 loan from the same noteholders.

EMA will also issue the noteholders with $19.5 million worth of options, subject to shareholders' approval at a general meeting in March.

Significantly, the noteholders have agreed to a number of amendments to the terms of their existing convertible notes as part of the deal.

EMA will no longer be required to carry out a long-planned $15 million equity raising, while the repayment date for the existing notes has been pushed back to December 2015.

However if the company fails to obtain shareholder approval to issue options and shares to repay its promissory notes, it will be defined as an event of default.

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