Lachlan Star has arranged for C$10 million in new debt to provide a cash cushion while the company works on reducing cash costs further.  After the steep stock price decline, equity financing would have been very dilutive.  This will likely be expensive too but limits dilution and risk.  Lachlan looks like it has turned the corner but it all takes time and it's good to have a cushion rather than having to go to somebody in a crisis mode.  
 
 
 
Lachlan Star Enters Into a C$10 Million Secured Debt Facility With Sprott Resource Lending Partnership

PERTH, WESTERN AUSTRALIA--(Marketwire - Feb. 14, 2013) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR RELEASE, PUBLICATION, DISTRIBUTION OR DISSEMINATION DIRECTLY, OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES

Gold miner, Lachlan Star Limited ("Lachlan" or the "Company") (TSX:LSA)(ASX:LSA) is pleased to announce that it has entered into a C$10 million secured debt facility (Facility) with Sprott Resource Lending Partnership ("Sprott"). The Facility has a 12-month term and is drawable in two x C$5 million Tranches. The term of the loan can be extended for a further 12 months under certain circumstances and the payment of an extension fee.

Under the terms of the Facility, Tranche 1 is required to be drawn and this is expected to occur next week and Tranche 2 is drawable within a 6 month period after the closing of the Facility. The Facility bears interest at 11% per annum, payable monthly. A fee is payable to Sprott in an amount equal to 4% of each draw under the Facility, being $200,000 for each C$5 million draw, payable by the issuance of ordinary shares of the Company to be priced at a 10% discount to the 5 day Volume Weighted Average price (VWAP) of the Company's shares on the TSX prior to the draw down, subject to the receipt of applicable exchange approvals.

Mick McMullen, Executive Chairman, commented, "This is a good outcome for shareholders in that it provides additional working capital on a stand by basis and with minimal equity dilution. Our owner mining fleet has been operating at budgeted levels, mining at the high grade Chisperos pit is now accessing ore and this debt facility provides a working capital cushion for the Company which sets the Company up for a strong CY 2013."

For and on behalf of the Board

Mick McMullen, Chairman

ABN: 88 000 759 535

 
Contact Information: 
Lachlan Star Limited
Sarah Beardmore
+61(8) 9481 6006
[email protected]
www.lachlanstar.com.au