Infinito Gold Ltd. has announced that it has accepted an offer of a demand loan facility for up to $500,000 from Exploram Enterprises, Ltd., its major shareholder, and that $115,000 has been advanced to the company under the loan to date.
The money is to bankroll Infinito’s legal battle against Costa Rica.
The loan closing occurred promptly upon acceptance of the offer by Infinito, said an announcement.
The indebtedness under the loan is to be secured under the existing general security agreement, as amended, between the company and Exploram delivered in connection with the sale of convertible notes of the company on Feb. 10, 2009, said the firm in a release.
The loan is in addition to $19.5 million of principal in other demand loans that are also payable to Exploram, and is in addition to $50.5 million in principal owed under prior notes.
All indebtedness under the loan is repayable on demand at any time and may be prepaid in whole or in part without penalty, said the company.
The funds advanced under the loan are expected to satisfy the company’s immediate working capital requirements as it continues to pursue its arbitration claim against Costa Rica, said the announcement.
The company said it will continue to work with its major shareholder, Exploram, to secure funding on a short-term basis, as required, to be used to finance the company’s short-term working capital requirements. Any such further funding is at the sole discretion of Exploram.
A key figure in the transaction is Ronald Mannix, operator of Exploram and a wealthy Canadian. Associates say he is committed to pressing Infinito’s case against Costa Rica for closing the Las Crucitas open pit gold mine in northern Costa Rica. A reader estimated in a letter last week that an arbitration panel might award Infinito as much as $300 million due to lost investment and lost profit on the gold.
The case has had a serious impact on Costa Rica’s efforts to attract foreign investment.