Palladon Ventures Ltd.

Palladon Ventures Ltd.

August 26, 2005 21:05 ET

Palladon Ventures Ltd. Announces Restructured Financing and Iron Project Transactions

BROOMFIELD, COLORADO--(CCNMatthews - Aug. 26, 2005) - Palladon Ventures Ltd. (TSX VENTURE:PLL) (the "Company") is pleased to announce that it has agreed with Luxor Capital Partners, LP ("Luxor"), subject to standard closing conditions and Exchange approval, if required, to restructure the pending transactions covering the Mountain Lion/Comstock Iron Project (the "Project"). The pending convertible debenture financing will be withdrawn, and the parties will restructure the US$10.3 million plus accrued interest, closing costs and other advances outstanding under the bridge loan, which was used to acquire the Project, into a term loan at 9.25% interest payable over five years. As a part of the restructuring, Luxor will acquire 50% of the Project, 35% from Palladon's joint venture partner Western Utah Copper Company and 15% from Palladon. Consideration for the 50% purchase will include US$3.0 million in direct acquisition cost and US$0.6mm in forgiveness of legal and financing fees. In addition, Luxor will contribute US$500,000 of equity to the Project and advance US$1.4 million for general corporate purposes under the new term loan (bringing the total amount outstanding under the term loan to US$12.75 million). Upon consummation of the transaction, Palladon will use a portion of the US$1.4 million committed to general corporate purposes to fully vest in the Western Utah Copper project. Additional loan proceeds will be set aside to fund the Company's pro-rata equity contribution to the Project. Luxor will also be granted two-year warrants to purchase Palladon common stock as follows: 1.5 million shares at $0.82, 1 million shares at $0.92, and 1 million shares at $1.00.

Proceeds of the transaction will enable further advancement on the iron project. Palladon recently signed an agreement to sell 1 million metric tons of iron ore over a twelve month period to a Chinese purchaser, and intends to service the term loan through proceeds of iron ore sales.

Accordingly, the company will not be placing shareholder resolution items 7 & 8 before shareholders at the Annual General Meeting Monday, August 29.

Palladon President George Young said, "This represents a major step forward for the Company and the iron project. We have been able to acquire a first class portfolio of mineral projects, have solidified the ownership and capital structure of the company with limited dilution, and have secured a committed long-term financial partner in Luxor Capital."


George S. Young, President, Director

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