VANCOUVER, Nov. 4, 2011 /CNW/ - Fire River Gold Corp. (TSX.V: FAU),
(OTCQX: FVGCF), (FSE: FWR) (the "Company") is pleased to announce that
it has signed a term sheet in relation to a proposed secured credit
facility (the "Credit Facility") with Sprott Resource Lending
The Credit Facility is for a principal amount of up to $7.5 million.
Amounts drawn under the Credit Facility will be secured against
substantially all of the assets of the Company and its subsidiaries.
Funds borrowed under the Credit Facility will be used exclusively for
the development of the Nixon Fork Mine and working capital purposes of
the Company and its subsidiary, Mystery Creek Resources, Inc.
Richard Goodwin, the Company's President and C.O.O. explains the
rationale behind this loan: "We have met most of our targets and are happy with our progress over
the last few months. During this ramp-up period we have overcome
numerous issues and continually improved our operation. Now that cash
flow has started, both from concentrate and doré sales, we do not
anticipate that we will need these funds. However, we recognize that
having this facility provides added assurance of success, like an
insurance policy, as we will be able to overcome any unforeseen
The Credit Facility provides for an initial drawdown of $1 million which
will be drawn on execution of the definitive credit agreement. A
second draw of up to $6.5 million is available through to November
2012. The Credit Facility is subject to satisfaction of customary
conditions for a secured credit facility. Funds drawn under the Credit
Facility are repayable by November 15, 2012 and accrue interest at a
fixed rate of 12% per annum.
In connection with the Credit Facility, a structuring fee of $50,000 has
been paid to Sprott in cash. Pursuant to the terms of the Credit
Facility, the Company will pay a non-refundable share bonus payment in
the amount of $750,000 (the "Bonus Fee") being 10% of the Credit
Facility, payable in Common Shares of the Company determined on the
basis of a price per Common Share equal to a 10% discount to the 10-day
volume weighted average closing price of such Common Shares as they
trade on the TSX Venture Exchange immediately prior to closing,
anticipated on November 15, 2011. All Common Shares issued in
satisfaction of the Bonus Fee will be subject to a 4 month hold period
in accordance with applicable Canadian securities laws.
Funding under the credit agreement is subject to completion of legal
documentation, regulatory, including the TSX Venture Exchange, approval
and conditions precedent typical of a transaction of this nature.
On behalf of the Board of Directors
President & C.O.O.
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this news release constitute
"forward-looking information" as such term is used in applicable
Canadian securities laws, including with respect to the closing of the
proposed Credit Facility with Sprott. Forward-looking information is
based on plans and estimates of management at the date the information
is provided and certain factors and assumptions of management. Forward
looking information is subject to a variety of risks and uncertainties
and other factors that could cause plans, estimates and actual results
to vary materially from those projected in such forward-looking
information. Factors that could cause the forward-looking information
in this news release to change or to be inaccurate include, but are not
limited to, the risks related to unsatisfactory results of due
diligence, international operations and doing business in foreign
jurisdictions, risks associated with mineral exploration and
development activities generally, the risk of commodity price and
foreign exchange rate fluctuations, and risks and uncertainties
associated with securing and maintaining necessary regulatory
approvals. The Company does not undertake to update any
forward-looking information except in accordance with applicable
SOURCE Fire River Gold Corp.
For further information:
Tel: +1 604 267 3040 Fax: +1 604 267 3042
Email: firstname.lastname@example.org or visit www.firerivergold.com
Suite 1100 -1200 West 73rd Ave, Vancouver, B.C., V6P 6G5