Shares in Titanium Resources (TRG, LON:TXR) skyrocketed 55% on news it resolved a dispute with the government of Sierra Leone relating to funds loaned to its subsidiary Sierra Rutile Limited (SRL).
Under the terms of the agreement, the government will use £13.6 million of the loan to buy shares in the subsidiary to own a 22.8% of its enlarged share capital.
The issue price of 12 pence represents a 60% premium to TRG’s closing price on 6 October.
This will slash the company’s outstanding debt to the government by 42.3% from €36.9 million to €21.3 million, or £18.6 million.
TRG said that the agreement strengthened its partnership with Sierra Leone and ensured that it is “fully aligned in developing a strong SRL”.
“The company wishes to thank the government of Sierra Leone for its positive approach in resolving this matter quickly and amicably.
“The company can now focus its efforts on expanding production and developing its assets towards their considerable potential,” said Chief Executive of Titanium Resources John Bonoh Sisay.
On August 20 this year, Titanium Resources announced that SRL and the government of Sierra Leone were in a dispute over certain interest payments due to the government.
Discussions between SRL, TRG, its largest shareholder Pala Investments Holdings, and the government have successfully resolved the matter, subject to the completion and signing of definitive documentation, which is expected in the next few weeks.
Pala holds a 23% stake in TRG.