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Bass Metals puts further piece in place for restructuring

Bass Metals (ASX: BSM) has had its existing corporate loan facility increased by $13 million by RMB Australia Holdings Ltd as it seeks to complete the recapitalisation of the company after geological and mining setbacks at its Hellyer Mine project.

The company also plans to raise up to an additional $10.7 million through a non-renounceable rights offer to existing shareholders of one new share plus one free attaching option for every three existing shares held.

The price for each new share shall be A$0.15 and the free attaching option, which is planned to be listed on the ASX, will have an exercise price of A$0.20 each and will expire on 30 September, 2014.

Funds will be used for an aggressive exploration program across its highly prospective land holding around the Hellyer Mill in Tasmania and to complete a feasibility study on the potential to recover gold from the Hellyer Tailings, as well as for general working capital.

Helmsec Global Capital is the lead manager to the offer.

The debt facility with RMB will now total $26.6 million and is due to be repaid progressively by 30 June 2014. It follows an extensive due diligence process which included an independent technical review of the revised Fossey Mine plan by Snowden Mining Industry Consultants.

The RMB offer is conditional on completion of documentation and includes a requirement for Bass to raise a minimum of $8 million in new equity and the issue to RMB of up to a total of 86.7 million Lenders options, which will be subject to Bass shareholder approval.

Bass can draw down $9 million of the $13 million extension amount prior to the completion of the equity raising, upon which the balance will be available.

Bass is required to issue 21.7 million options for the initial drawdown and 5 million options for every $1 million drawn down thereafter on the $13 million extension to the corporate facility.

The lender options will have an exercise price of either $0.20 or a 20% premium to any equity offer price, whichever is the lower and expire on 30 September 2014.

A general meeting of shareholders is planned for 26 September 2011 to seek approval of various resolutions relating to this Tranche 1 capital raising activity. The minimum raising under the offer shall be $8 million.

Bass considers that the setbacks which occurred suddenly at its Hellyer Mine operations in early June, 2011 have been managed and that it has a robust operational plan to take it forward. The company would be encouraged by the support of RMB and the involvement of Helmsec.

Bass's shares are currently suspended at the request of the company pending certainty surrounding the entitlements offer.