Developing phosphate interests in the Georgina Basin, Queensland, Australia
Message: Excerpt from the Q3 10-Q
Basically this means that LGDI is going bankrupt by early 2013 when the convertible note becomes payable. Actually it will run out of cash before year end, based on the company's own projections, unless they pull a rabbit out of the hat. One thing about LGDI ... it discloses everything and all you have to do is read the SEC reports to find out how bad things really are ...
As at September 30, 2012, the Company had A$3,065,000 in cash.
We plan to continue our exploration and development program throughout 2012 and the Company has an obligation to incur expenditure on phosphate projects of A$805,000, diamond projects of A$995,000 and other commodity projects of A$380,000. Our budget for the remaining three months of 2012 for general administration costs is A$250,000, Paradise’s budget for general and administration costs is A$1,050,000 and NADL’s budget for general administrative costs is A$285,000.
On February 13, 2012, the Company announced that it had achieved the first major milestone for financing of its 100% owned Paradise phosphate project.
This first step has involved a transfer of all Legend’s phosphate assets into Paradise, a 100% owned subsidiary of Legend; the issue of 100 million ordinary shares (100% of the issued shares of the subsidiary) by the subsidiary to Legend; and funding via a A$7.5 million convertible note facility (“Convertible Note Agreement”) which has been injected into the subsidiary through Acorn Capital Ltd (“Acorn”), an Australian financial institution. In early May 2012, the amount of the convertible note was increased by A$2.5 million. The A$10 million will convert into equity in the subsidiary upon a successful Initial Public Offering (“IPO”) and listing of the subsidiary on the Australian Securities Exchange (“ASX”) within 12 months of the note issue date.
The phosphate assets comprise the Paradise Phosphate Rock Deposits of Paradise North (historically known as Lady Jane) and Paradise South (historically known as Lady Annie), the D-Tree deposit and the deposits associated with Legend’s rights and obligations under the King Eagle Joint Venture agreement (i.e. Highland Plains, Lily & Sherrin Creek and Quita Creek). The assets include the exploration and mining permits and applications associated with the above deposits and related infrastructure.
The convertible note facility of A$10 million to Paradise is repayable 12 months from the issue date of the agreement. The notes bear interest at the nominal rate of 10% per annum (the actual amount of effective interest depends upon the event that triggers repayment). If, within 12 months of the completion date of the agreement, Paradise conducts a public offering of securities in Australia and those securities are listed on the ASX, then the Notes will be convertible into ordinary shares of Paradise at a conversion rate which is based on the pre-money value of Paradise at the time of the public offering of securities. Further, if Paradise proceeds to an IPO; (i) Paradise will be the issuer of the securities to be offered; and (ii) a disclosure document for the offer of the securities under Australian law will be made available when the shares are offered;
Funds received under the convertible note facility are being used to progress the project, its development, production and ultimately the export of phosphate rock from the phosphate deposits. The notes are secured by a security interest in the phosphate assets and in the shares of Paradise.
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