28/01/2014 - 11:01

EMA's Young to take executive role

28/01/2014 - 11:01

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Mike Young will take an executive role at Energy and Minerals Australia as a condition of a deal to secure more debt funding for the uranium explorer.

Energy and Minerals Australia chairman Mike Young.

Mike Young will take an executive role at Energy and Minerals Australia as a condition of a deal to secure more debt funding for the uranium explorer.

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

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

A condition of the deal is that Mr Young, who was appointed non-executive chairman of EMA in April last year, accepts the role of full-time executive director of the company within the coming weeks.

The former BC Iron chief executive remains a non-executive director at the iron ore miner and is also non-executive chairman at Cassini Resources.

Mr Young declined to comment on his new role when contacted by Business News.

Under the complicated 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.

EMA chief executive Julian Tapp said the deal reaffirmed the support of the company's major funders.

"This funding ensures that the company can continue to advance the development of Mulga Rock in line with the schedule of being in production by the end of 2016," Mr Tapp said.

EMA shares last traded at 3.5 cents.

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