Carpathian Gold Inc. Provides Corporate Update
TORONTO, ONTARIO--(Marketwired - Aug. 8, 2014) - Carpathian Gold Inc. (TSX:CPN) (the "Corporation" or "Carpathian") advises that it has concluded a further extended forbearance and amendment agreement (the "Agreement") with Macquarie Bank Limited ("Macquarie") in respect of the project finance facility (the "Facility") entered into between Macquarie and the Corporation's wholly-owned subsidiary, Mineração Riacho dos Machados Ltda. ("MRDM"). The Agreement extends the previously announced forbearance period which expired on July 31, 2014 to August 29, 2014. As of today, Macquarie has advanced an aggregate of approximately US$169.0 million to MRDM under the Facility. There is no assurance that Macquarie will agree to any further extensions of the forbearance.
The Corporation also advises that it has now received notice from Macquarie of its election to require payment by MRDM and the Corporation of the completion guarantee refund amount and the production shortfall payment under the gold stream transactions with Macquarie. As previously disclosed, the gold stream transactions provide that, if during the period from July 1, 2013 to June 30, 2014, MRDM has not produced a minimum of 80,000 ounces of refined gold (of which 10,000 ounces would be deliverable to Macquarie), then Macquarie shall have the right to require MRDM and the Corporation, jointly and severally, to refund to Macquarie an amount equal to that percentage of the upfront payments which is equal to the percentage of underproduction of refined gold over such 12-month period compared with that which was projected for such 12-month period as set out in the life of mine plan agreed at the time of closing of these transactions. During said 12-month period, MRDM produced a total of 8,168 ounces of refined gold, compared to the 100,000 ounces of refined gold that was projected to be produced under the life of mine plan that was agreed to at the time of closing of the gold stream transactions. Given the forgoing, the underproduction of refined gold during the 12-month period ending June 30, 2014 is equal to 91.8% and, therefore, a refund amount of US$27,549,600 is owed to Macquarie under the gold stream transactions.
Pursuant to the terms of the gold stream arrangements, MRDM and the Corporation have elected to defer payment of the refund amount until the later of (i) the date upon which the violations and defaults under the Facility have been remedied and (ii) the date upon which the refund amount may be paid without constituting a default under the Facility. The refund amount bears interest at the rate of US prime plus 4%. In respect of MRDM, Macquarie has agreed to forebear its rights to charge or accrue interest on the refund amount or exercise any such rights with respect to interest until August 29, 2014. There is no assurance that Macquarie will agree to any extensions of the forbearance.
Carpathian is an exploration and development company whose primary business interest is developing near-term gold production at its 100% owned Riacho dos Machados Gold Project in Brazil. In addition, it is also focussed on advancing its exploration and development plans on its 100% owned Rovina Valley Au-Cu Project located in Romania.
Forward-Looking Statements: Statements and certain information contained in this press release and any documents incorporated by reference may constitute "forward-looking statements" within the meaning of applicable Canadian securities legislation which may include, but is not limited to, information with respect to the Corporation's expected production from, and further potential of, the Corporation's properties; the Corporation's ability to raise additional funds; the future price of minerals, particularly gold and copper; the estimation of mineral reserves and mineral resources; conclusions of economic evaluation; the realization of mineral reserve estimates; the timing and amount of estimated future production; costs of production; capital expenditures; success of exploration activities; mining or processing issues; currency exchange rates; government regulation of mining operations; and environmental risks. Often, but not always, forward-looking statements/information can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations (including negative variations) of such words and phrases, or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements/information is based on management's expectations and reasonable assumptions at the time such statements are made. Estimates regarding the anticipated timing, amount and cost of exploration and development activities are based on assumptions underlying mineral reserve and mineral resource estimates and the realization of such estimates are set out herein. Capital and operating cost estimates are based on extensive research of the Corporation, purchase orders placed by the Corporation to date, recent estimates of construction and mining costs and other factors that are set out herein.
Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Carpathian and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include: uncertainties of mineral resource estimates; the nature of mineral exploration and mining; variations in ore grade and recovery rates; cost of operations; fluctuations in the sale prices of products; volatility of gold and copper prices; exploration and development risks; liquidity concerns and future financings; risks associated with operations in foreign jurisdictions; potential revocation or change in permit requirements and project approvals; competition; no guarantee of titles to explore and operate; environmental liabilities and regulatory requirements; dependence on key individuals; conflicts of interests; insurance; fluctuation in market value of Carpathian's shares; rising production costs; equipment material and skilled technical workers; volatile current global financial conditions; and currency fluctuations; and other risks pertaining to the mining industry. Although Carpathian has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking information contained herein or incorporated by reference are made as of the date of this presentation or as of the date of the documents incorporated by reference, as the case may be, and Carpathian does not undertake to update any such forward-looking information, except in accordance with applicable securities laws. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers are cautioned not to place undue reliance on forward-looking information. The forward-looking information contained or incorporated by reference in this document is presented for the purpose of assisting shareholders in understanding the financial position, strategic priorities and objectives of the Corporation for the periods referenced and such information may not be appropriate for other purposes.
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