LAF lafayette mining limited

1 for 1 renounceable rights issue

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    News summary of latest announcement:

    ""Headline News

    Lafayette recapitalisation, restructure on track
    By RWE Australian Business News, 01 Nov 2007
    Sydney - Thursday - November 1: (RWE Aust Business News) -

    Lafayette (ASX:LAF) will recapitalise and restructure the company and its 74 per cent owned Rapu Rapu project and has made progress in implementing the plan, working closely with a new cornerstone investor and South East Asian Strategic Asset Fund LP (SEASAF).

    On 10th October 2007, a Special Purpose Vehicle (SPV) owned by the investor and SEASAF, signed an agreement to lend $US10 million to the project to fund urgently needed working capital.

    To date, approximately $US5.5m has been drawn.

    The agreement by the bank group to sell all project bank debt and (closed out) hedging obligations to the investor group has been formally documented and a call option agreement was signed by all parties on 19th October 2007.

    This right must be exercised on or before 30th November 2007 by which time the total indebtedness of the project is expected to be approximately $US269m.

    The consideration payable to the bank group on or before 31st December 2007 for the purchase of this debt will be $US123m.

    A key element of the restructure is the close out of the Rapu Rapu base and precious metals hedge book.

    On 17th October 2007, Lafayette cash settled all of the outstanding base and precious metals hedge contracts for its Rapu Rapu project.

    The total cost of the settlement was $US137.6m.

    It is a requirement of the proposed restructure that an agreement be reached with the holders of Lafayette's $8m convertible notes, to convert their notes to Lafayette equity on terms acceptable to the cornerstone investor and to obtain a waiver from the note holders in respect of the 10pc interest coupon and the 1pc participating interest due for payment on 15th October 2007.

    The terms of conversion originally proposed to the note holders have not been accepted by all note holders.

    Lafayette is continuing to work with the note holders and the investor to obtain the waiver and agree conversion terms on a basis that is acceptable to all parties.

    Following discussions with a potential underwriter of the rights issue and further discussions with SEASAF and the investor, it has been re-confirmed that a 1 for 1 renounceable rights issue will be offered to all shareholders other than SEASAF, the cornerstone investor or the SPV on completion. This offering may or may not be underwritten. Lafayette Mining Limited

    A detailed due diligence review of the Rapu Rapu project and Lafayette is a prerequisite for taking a decision to exercise the call option is expected to conclude shortly. "" end of copy

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