Lydian International Ltd (TSE:LYD) said it had entered a forbearance agreement with senior lenders, stream financing providers, and equipment financiers due to the illegal blockades it has endured at the Amulsar project in Armenia which have hampered construction at the firm's huge gold mine project.
The agreement means that the lenders have temporarily suspended all principal and interest payments due and payable to each of them.
They also forbear to 'declaring or acting upon, or exercising default-related rights or remedies under such creditor's financing agreement with respect to certain events of default, in each case, until the earlier of 31 December 2018, the occurrence of an additional event of default under such creditor's financing agreement or any breach by the company of the forbearance agreement'.
During the so-called period of forbearance, Lydian will continue to petition local and national government officials to enforce the law by removing the illegal blockades and pursue additional options that allow Lydian to resume construction, it said.
To mitigate costs during ongoing illegal blockades, Lydian has reduced personnel, terminated certain construction-related contracts, and placed other contractors on standby through to October 31 this year.
Further cost reductions are in process and will continue during the period of forbearance.
"Our position and request of the Armenian government has been simple and consistent; we support the government's audits and investigation initiatives, but Lydian should be allowed to continue construction during these processes," said Joao Carrelo, the president and chief executive at Lydian.
"Our most immediate commercial objective is to best protect the interests of our shareholders, lenders, stream providers, equipment financiers, and other stakeholders. We remain hopeful this results from a near-term resumption of construction and ultimately seeing Amulsar become Armenia's largest gold producing mine," said Carrelo.
Also in today's statement, and in connection with the 2016 agreement between Lydian and largest shareholder, Resource Capital Fund, which owns around 32%, and which can nominate two directors.
RCF's nominees John Stubbs and Joshua Parrill have resigned from the board of directors to be replaced by new nominees - Gene Davis and Edward Sellers.