Auroch Minerals negotiates win-win repayment agreement with Xtract
Auroch Minerals (ASX:AOU) has reached an agreement with Xtract Resources Plc regarding the circa US$1.7 million owed to AOU.
Repayment has been structured as a convertible note agreement for an amount of approximately US$750,000, a loan agreement for the balance (US$1 million), a 3% royalty agreement over production at the Manica Gold Project in Mozambique and the issue of 500 million warrants in Xtract Resources Plc.
Before we go too far, it should be noted that this project is located in a region which carries sovereign risk. As an early stage initiative operating in a high risk region where getting mining projects up and running is no simple feat, those considering this high risk stock as an investment should seek independent financial advice.
AOU executive chairman, Glenn Whiddon highlighted that the agreement represented a win-win outcome in saying, “Auroch is pleased to have reached a resolution which will give Xtract Resources the opportunity to complete a definitive study, while at the same time providing Auroch with a regular cash flow to fund ongoing exploration and business development activities, as well as maintaining its cash balance of $6 million”.
As part of the agreement, Xtract has entered into an unsecured loan with AOU and pursuant to the terms of the loan agreement repayment will be made on or before December 31, 2017, together with interest that will accrue at a rate of 10% per annum.
Should Xtract bring the Manica project into production, AOU will receive a royalty payment equal to 3% of gross revenue from commercial operations, subject to a maximum payment of the total amount of the debt outstanding (circa US$1.7 million).