RE: debt Yes I agree for that part of the previous loan. But what about the $5.6M that "which will be repaid, with interest at escalating rates, on or before July 31, 2013"? PLUS ongoing capital contributions.
Read excerpt from NR below.
How do they possibly pay this AND debt payments ($400K) AND capital contributions?
Concurrent with the joint venture and the debt reduction, Gryphon Gold and Waterton entered into an operating agreement that will govern the operational and financial obligations of both joint-venture parties on a going-forward basis. Gryphon Gold is responsible for the payment of an initial $4.0-million to the joint venture to compensate Borealis for obligations incurred prior to the formation of the joint venture, in addition to 40 per cent of an initial $4-million contemplated capital contribution. Waterton will advance a total of $5.6-million to Gryphon, with $3.0-million already having been advanced, to cover the company's initial capital contributions to the joint venture, which will be repaid, with interest at escalating rates, on or before July 31, 2013. Continuing capital contributions will be determined by the board of managers of Borealis and will be paid by both parties equal to their respective ownership interest in Borealis. If one party fails to meet a financial obligation, it will be subject to dilution in their ownership interest in Borealis. In addition, if Gryphon fails to meet monthly payment obligations under the senior credit facility, its interest in Borealis will be diluted in accordance with the terms of the credit agreement relating to the senior credit facility.