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Melior Resources warns of bankruptcy

Titanium junior Melior Resources Inc. warned that its shaky financial situation could force it into bankruptcy after a plan it was depending on for much needed cash fell through.

In a Dec. 13 news release, Melior said that as part of a broader debt-dependent refinancing plan, it had aimed to sell a put option on stock it owns in Asian Mineral Resources Ltd.

The put option could have garnered the company C$1.13 million.

But selling the put options appears to have been dependent on Asian Mineral Resources completing an acquisition of Kasbah Resources Ltd., another ASX-listed junior.

The deal, announced in August, was blocked by Australian courts, Melior said in its recent statement, dashing hopes to raise cash through the put options.

Now without the put option, Melior said it would have to seek new sources of funding.

"[T]he company remains in serious financial difficulty and there is considerable uncertainty regarding the company's ability to continue as a going concern," Melior stated.

The company could not be reached for immediate comment to clarify details of the financial issues it faces.

The put options were part of other financing plans to bolster Melior's deteriorating finances.

In early November, Melior reported that a key shareholder, Pala Investments Ltd., had extended it a lifeline by increasing a debt facility by US$300,000 to US$3 million. The facility bears interest at 10% per year and is due in 2022.

Of note, Pala is also involved in the Asian Mineral-Kasbah tie up that has, for now, been quashed by the courts in Australia. Pala has described itself as a cornerstone investor in the combined entity.