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."