Rye Patch Gold RPMGD

Contingent consideration

[ts9222]

With over $20m cash, it looks like they have plenty of cash to pay the contingent consideration of CAD$6.7m for the closing of the Florida Canyon purchase. If they pay in cash, the shorter guessing that they will be paid in shares would need to buy back that 1.2m shares shorted.

From the prospectus, they have the option of paying half in shares and half converted to "an unsecured debt obligation maturing five years after commencement of commercial production".

"the vendor may elect to convert the amount owing into Common Shares at a price per share equal to the greater of U.S.$0.20 and the volume weighted average trading price of the Common Shares for the 20 trading days prior to the vendor’s conversion notice."

If the vendor is paying U.S.$0.20 or around CAD $0.26 for the shares, it does not make sense for them to be shorting at the current share price of CAD $0.22, not unless they don't mind losing money.

[ts9222]

The web page describing the Florida Canyon acquisition doesn't say the greater of U.S.$0.20 which makes it sound like a dangerous "floorless convertible". But the AIF Annual Information Form which is more legally definitive than a web page which is not always accurate does state the floor. " The Cash Contingent Consideration payable to ADM-Gold may be alternatively satisfied by