Q3 MD&A Out...here is outlook. Like I said before..X registered with the PRM...but we need to resolve Amparos. Oroco has $1.5M in cash and $750,000 in working capital so we can hold out but need those Cerro Prieto royalties from Goldgroup commercial production.
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The Company has as its main assets, the Xochipala Property and the remaining balance, after
payout of the Debentures and payment of various accounts payable, of the consideration paid by
Goldgroup for the Cerro Prieto Property (the “Consideration”)(details on pages 6 and 7 above)
Pursuant to the terms of the Goldgroup Transaction, Oroco took an assignment of all of Minas de
Oroco’s right to the refund of all value added tax paid by Minas de Oroco in the years 2008
through 2012 (the “VAT Refund”). This amount is estimated to be in excess of $500,000.
However, the amount of such refund actually obtained and the timing of payment is uncertain.
The payment of the First Note and Production Royalty are contingent upon Goldgroup achieving
Commercial Production from the Cerro Prieto Property. The First Note, Second Note and
Production Royalty are scheduled to be paid over time or at a future time. Payment of the
Production Royalty is based on the average price of gold in the month in which it is produced.
Further, pursuant to the Subordination Agreement, the Company may not receive any payment of the First Note, Second Note (unless paid in shares of Goldgroup), or the Production Royalty until
Goldgroup has repaid the Loan Facility and all related amounts.
The Company obtained registration of its interest in the Xochipala Property during the current
fiscal year, which registered title is the subject of two “amparo” petitions (See MINERAL
PROPERTIES, Xochipala Property above). The Company, subject to the availability of funding,
intends to commence the exploration of the Xochipala Property following obtaining a favourable
outcome to the Amparos.
The outlook for the Company is strongly tied to receiving the Goldgroup Transaction
Consideration in a timely fashion in order to fund the exploration of the Xochipala Property and
other operations of the Company. The Company’s ability to do so is largely contingent upon
Goldgroup achieving Commercial Production from the Cerro Prieto Property, Goldgroup’s
settlement of the Loan Facility and the future market price of Goldgroup’s common shares.