Interesting readTo assist in the financing of the purchase of the Monarch claims, the Company borrowed US$3 million from Concept Capital Management Ltd. (“CCM”) by way of a secured, non-interest bearing bridge loan (the “Loan”) which will be repaid by the proceeds from and is intended to be replaced by the issuance of a 5-year 6% secured convertible redeemable debenture (the “Debenture”) for C$3 million, to be issued by the Company to CCM. The Loan is non-interest bearing and is secured by a limited recourse guarantee of Atlanta and by a mortgage on the Monarch claims. The Debenture will also be secured by a limited recourse guarantee of Atlanta and by a mortgage on the Monarch claims. As additional consideration to CCM for providing the Loan to the Company, Atlanta has provided CCM with an option to purchase the Monarch claims for US$3 million (the “Property Option”). This option will only become exercisable if the Loan is repaid other than by the issuance of the Debenture or if the Loan remains outstanding as of January 31, 2012. The Property Option will terminate upon the earlier of (i) the issuance of the Debenture and warrants to purchase 30 million common shares of the Company (the “Warrants”) and (ii) 90 days following repayment of the Loan other than by means of issuing the Debenture and the Warrants. The issuance of the Debenture and the Warrants is subject to the approval of the TSX Venture Exchange and, as required by the Exchange, the approval of shareholders of the Company. The Company advises that it is in the process of settling definitive
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Atlanta Gold Project, Idaho Report No. 204
documentation for the Debenture and the Warrants with CCM, following which it will seek stock exchange and shareholder approvals. If such approvals are not obtained, the Debenture and Warrants may not be issued and the Loan will continue to be outstanding. Failure to issue the Debenture by a date to be determined may constitute an event of default under the Loan, whereupon the Loan will become immediately due and payable and CCM may then elect to enforce its mortgage security against the Monarch claims. In addition, if the Loan is repaid other than by the issuance of the Debenture and the Warrants, or if the Loan remains unpaid at January 31, 2012, the Property Option will become exercisable by CCM. Should CCM elect to enforce its mortgage security, Atlanta may cease to hold an interest in the Monarch claims. Should CCM elect to exercise the Property Option and subsequently complete the purchase the Monarch claims, Atlanta will cease to hold an interest in the Monarch claims. There can be no assurance that Atlanta will be able to re-acquire any interest in the Monarch claims on satisfactory terms or at all.
Upon issuance of the Debenture, Atlanta will issue to CCM an option to purchase an aggregate of 4,000 ounces Au from the Atlanta Project at a price of US$1,400 per ounce. The option will vest after the Atlanta Project has completed production of 20,000 ounces Au and will expire on the fifth anniversary of the date of vesting.