Note 6 - Mine Owners Debt Facilities

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Mine Owners Debt Disclosure [Text Block]

6.

MINE

OWNERS DEBT FACILITIES

On

July 5, 2013,

GGCRL, GGCR Mining, and Mego concluded a

fifteen

year mine operating agreement with Linne as the operator along with an

$8,800,000

debt facilities agreement to fund future production at the central section of the

Toukhmanuk gold-silver open pit mine in Armenia. The debt facility includes interest at LIBOR plus

8%,

and the operator, Linne, has an incentive based compensation model, to be paid approved costs plus

10%

of the actual sales of gold, granting share options for up to

10%

in GGCRL or the subsidiary project company in Armenia to Jacero Holdings Limited, a limited liability company incorporated in the Republic of Cyprus (“Jacero”), and extending the existing offtake agreement with IM until the end of

2027.

The loan

may

be pre-paid. GGCRL and GGC have signed as Guarantors on the debt facility agreement. The debt is secured by the Getik license as well as a subordinated security interest to ABB in Mego shares, the Toukhmanuk mining and exploration licenses, ore stockpile included in the Company’s Inventory and Mego property. The mine operator procured a plant for expansion and reportedly began to restart production. Pictures of plant construction progress are on the Company’s website. While Linne procured and began assembling a new processing plant at Toukhmanuk, completion has been delayed, mining in accordance with relevant agreements and approved plans has

not

occurred, and Linne has asked to be relieved of its responsibilities but terms for accommodating that request have

not

been agreed to and Linne continues to be responsible. The Company is carrying this as a liability, though the Company reserves the right to contest this liability pending substantiation concerns and offsetting amounts caused by damage and non performance by Linne, as well as other reasons.  The balance due on the debt facilities as of

June 30, 2017

and

December 31, 2016

was

$

4,104,577

.

As of

June 30, 2017

and

December 31, 2016,

the Company has accrued interest of

$1,851,451

and

$1,566,444,

respectively, on this debt facility based on calculations from Linne which the Company does

not

agree with or have support for. Refer to Note

13

– Agreements and Commitments.