Operating Line Of CreditThe NR is all about securing a loan in the tune of probably up to $4mln with Auramet Trading, LLC and not about paying off the debenture. This is the same outfit as announced in NR Aug 16, 2007 regarding to two surface rights acquisition ($8.4mln):
“…..to facilitate this program, it has acquired significant surface rights in the area from a group of local land owners…….
The Company funded this transaction through internal cash reserves and a US $2.5 million bridge financing loan from Auramet Trading, LLC. The loan has an interest rate of 12% per annum, and is repayable in six equal monthly instalments starting September 2007.”
I’ll give a shot at deciphering this latest NR:
· Company in expansion mode in and around existing resource areas, surface & mineral rights acquisitions, building own mill.
· Secure financial resources by way of flexible loan facilities such as Line of credit described in NR.
· Loan secured by 50% of refined ore from Platosa up to $4mln for a period of 2 years.
· Credit limit probably $4mln.
· Auramet will purchase and pay for ore immediately upon shipment of ore (prior to refining) to the refiner by way of crediting purchasing price towards Excellon’s loan account.
· Purchase price will be market price as determined by the 2 parties.
· Cost of arranging this facility about $0.5mln.
· Auramet will charge interest @ LIBOR (London Interbank Offered Rate).
· Auramet may, between January 5, 2008 and September 4, 2009 exercise options to purchase 1.35mln EXN shares with a potential per share profit of share price in that period (or later) minus the exercise price, which is the recent prevalent price.
This loan facility is made possible in anticipation of the end of the debenture obligation thus freeing up 50% of the current silver production being earmarked to go to the trust.
KT