Lion One Metals Limited (LIO) has entered into a formal forbearance agreement with its senior secured lenders, Nebari Gold Fund 1, LP, Nebari Natural Resources Credit Fund I, LP and Nebari Natural Resources Credit Fund II, LP. The agreement addresses outstanding debt obligations tied to the company's Tuvatu Alkaline Gold Project in Fiji. Under the terms of this arrangement, the lenders have extended the final repayment date for the first tranche of the company's loan facility to December 31, 2026.

The company confirmed that it has successfully cured previous financial and non-financial default events. These breaches, which emerged earlier this year, had triggered an increase in the interest rate margin on the debt. With the default events now resolved, the interest rate has reverted to its original level. A portion of the proceeds from a recent $17.5 million private placement was utilized to satisfy specific payment obligations and address the breach of a $7 million working capital covenant, which was central to the credit facility’s terms.

The total principal amount currently outstanding under the loan facility stands at approximately US$31.2 million. As consideration for the repayment extension, Lion One has agreed to pay a restructuring fee to the lenders. This fee is set at US$2 million, though it may be reduced to US$1 million provided that the company successfully repays and satisfies all obligations under the facility on or before September 30, 2026.

Looking ahead, the company has initiated a formal refinancing strategy to manage this debt burden. The plan involves exploring various initiatives to facilitate the full repayment of the facility, including the potential for a new refinanced senior debt arrangement, additional equity offerings, or the deployment of operational cash flows toward debt reduction. Lion One is targeting the completion of this broader refinancing strategy by the end of 2026. The company remains focused on its ongoing development at Tuvatu, which encompasses an operating underground mine, a pilot plant, and an assay facility.

Read the full announcement: Lion One Announces Forbearance Agreement with Senior Lender Including Extension of Repayment Date