DEBT

6 Months Ended

Jun. 30, 2020

DEBT

DEBT

NOTE 11 DEBT

On August 10, 2018, the Company finalized a $50.0 million senior secured three year term loan facility with Royal Capital Management Corp., as administrative agent, and the lenders party thereto.  Interest on the loan accrued at the rate of 9.75% per annum with interest due monthly and was secured by a lien on certain of the Company’s and its subsidiaries’ assets.  

On June 25, 2020, the Company entered into an Amended and Restated Credit Agreement (“ARCA”) which refinanced the outstanding $50 million and which terms differed in material respects from the old loan as follows:

● Sprott Private Resource Lending II (Collector), LP replaced Royal Capital Management Corp. as a lender and the administrative agent and an affiliate of Robert McEwen remains as a lender.

● Scheduled repayments of the principal are extended by two years. Monthly repayments of principal in the amount of $2.0 million are due beginning on August 31, 2022 and continuing for 12 months, followed by a final principal payment of $26.0 million plus any accrued interest on August 31, 2023.

● The minimum working capital maintenance requirement was reduced from $10.0 million under the original term loan to $nil at June 30, 2020 to December 31, 2020 and from $10.0 million to $2.5 million at March 31, 2021 to the end of 2021. The working capital requirement increases to $5.0 million for March 31, 2022, $7.0 million for June 30, 2022, and $10 million for September 30, 2022 and thereafter.

● The Company issued 2,091,700 shares valued at $1,875,000 to the lenders as bonus interest. The value of the shares plus the unamortized costs of the original term loan will be amortized over the modified term of the loan.

The remaining principal terms of the original agreement remain unchanged.

A reconciliation of the Company’s long-term debt for the six months ended June 30, 2020 and for the year ended December 31, 2019 is as follows:

	Six months ending June 30, 2020		Year ending December 31, 2019
Balance, beginning of period	$	49,516	$	49,206
Interest expense		2,598		5,185
Interest payments		(2,431)		(4,875)
Debt amendment fee		(1,875)		—
Balance, end of period	$	47,808	$	49,516
Less current portion		—		10,000
Long-term portion	$	47,808	$	39,516

During the six months ended June 30, 2020, $nil of interest was capitalized in plant and equipment (six months ended June 30, 2019 – $0.6 million, capitalized to Gold Bar construction).