Infinito Announces Update Regarding Standstill Agreement with Noteholders
CALGARY, March 31 /CNW/ --
Trading Symbol: TSX-V: IG
CALGARY, March 31 /CNW/ - Infinito Gold Ltd. (the 'Company') announces
that the standstill agreement (the 'Agreement') with Exploram
Enterprises Ltd. ('Exploram') and Auro Investments Ltd. ('Auro') in
respect of defaults under the outstanding $50,500,000 Secured
Convertible Notes (the 'Notes') of the Company held by Exploram and
Auro (together, the 'Noteholders') and the waivers granted by Exploram
and Auro (together, the 'Holders') with respect to certain events of
default under the Agreement both will expire on April 1, 2011.
The Company has been advised by the Noteholders that they will not enter
into a new standstill agreement as they wish to maintain access to
their full rights under security agreements securing the Company's
obligations under the outstanding $50,500,000 Secured Convertible Notes
(the 'Notes').
With the expiry of the Agreement and no waiver of existing events of
default under the Notes and related security agreements, as of the date
of this news release the Noteholders can now demand repayment of all
$50.5 million in principle, plus accrued interest, penalty interest and
structuring fees totalling $20.3 million. The Company has been advised
by the Noteholders that their current intention is not to exercise
their rights to demand payment under the Notes or to enforce their
security.
In addition to the outstanding Notes, the Company also has $12.2 million
in outstanding demand loans from Exploram plus accrued interest of $1.8
million.
Because the demand loans of the Company have always been payable upon
demand and because the Agreement could be terminated with three
business days notice by the Noteholders, this development does not
change the Company's current liquidity position or the going concern
assumption adopted by the Company in preparing its consolidated
financial statements and related disclosures.
In the event that the legal proceedings commenced by the Company in
January 2011 with the Administrative Law Chamber of the Supreme Court
of Costa Rica are not resolved in a timely and favorable manner, if new
information pertaining to the November 2010 Tribunal Contencioso
Adminastrativo ruling becomes available, if short term financing for
the pursuit of legal appeals is not obtained, or if the Noteholders
exercise their rights under the security agreements delivered in
connection with the Notes, the carrying value of certain mineral
interests, property plant and equipment, and deposits on long lead-time
equipment would become impaired, and the Company would cease to be a
going concern.
The Company entered into a demand loan facility on July 22, 2010 with
availability of $6.8 million, and has drawn $5.8 million in funds as of
the date of this news release. While the Company continues to seek
alternative financing arrangements, it is not possible to predict
whether these efforts will be successful. The Company will monitor its
cash flow requirements and continue to operate in a prudent manner to
preserve cash. The Company has $0.2 million in cash on hand and
remaining availability of $1.0 million under this demand loan which is
now expected to satisfy the Company's cash requirements to
approximately April 30, 2011. However, subsequent advances under this
demand loan are at the sole discretion of Exploram.
Caution Regarding Forward-Looking Information and Statements
Certain statements in this press release address future events and
conditions and, as such, involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by the statements.
These factors include the stated intentions of the Holders of the
Notes, impact of the Tribunal Contencioso Adminastrativo (the
'Tribunal') decision, the impact of the request for annulment
('Casación') filed by the Company with the Supreme Court of Costa Rica,
('SALA I'), the timing and nature of any future legal proceedings, the
impact of the current injunction on development at the Costa Rican mine
site and the timing and nature of any future ruling rendered with
respect to this injunction, the timing and availability of short-term
and long-term financing, the impact of general business and economic
conditions, global liquidity and credit availability on the timing of
cash flows and the values of assets and liabilities based on projected
future conditions, fluctuating gold prices, currency exchange rates,
possible variations in ore grade or recovery rates, changes in
accounting policies, changes in the Company's corporate resources,
changes in project parameters as plans continue to be refined, changes
in project development, construction, production and commissioning time
frames, risk related to joint venture operations, the possibility of
project cost overruns or unanticipated costs and expenses, higher
prices for fuel, steel, power, labour and other consumables
contributing to higher costs and general risks of the mining industry,
failure of plant, equipment or processes to operate as anticipated,
unexpected changes in mine life, unanticipated results of future
studies, seasonality and unanticipated weather changes, costs and
timing of the development of new deposits, success of exploration
activities, permitting time lines, government regulation of mining
operations, environmental risks, unanticipated reclamation expenses,
title disputes or claims, limitations on insurance coverage and timing
and possible outcome of pending litigation and labour disputes, as well
as those risk factors discussed or referred to in the Company's annual
Management's Discussion and Analysis for the year ended March 31, 2010
filed with the applicable securities regulatory authorities and
available at SEDAR www.sedar.com.These statements are made as of the
date of this release but Company undertakes no obligation to update
these forward-looking information or statements if circumstances or
management's estimates or opinions should change. The reader is
cautioned not to place undue reliance on forward-looking information or
statements.
INFINITO GOLD LTD.
John Morgan
President
'The TSX Venture Exchange does not accept responsibility for the
adequacy or accuracy of this release.'
To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/March2011/31/c8420.html
INFINITO GOLD LTD.
600, 1100 1st Street S.E.
Calgary, Alberta T2G 1B1
Telephone: (403) 444-5191