Genesis Resources (ASX: GES) has secured a loan facility of $3 million under an agreement with an unrelated Malaysian financing company, to support its ongoing drilling program at the Plavica gold and copper project in Macedonia.
Whilst GES is not obligated to use the loan facility, Genesis intends to draw down $1 million under the facility early next week in order to bolster cash flow requirements.
Genesis can draw down on the facility at its discretion in any number of tranches.
The facility is unsecured, bearing interest at 8% per annum with no loan fees, and Genesis may pre-pay amounts owing at any time without incurring pre-payment penalties.
The drawn down principal amount plus interest is payable by Genesis on the repayment date, but only to the extent that the company has sufficient funds in excess of its working capital requirements, as determined by Genesis’ board.
In the event that Genesis does not have funds in excess of its working capital requirements, the parties are obliged to negotiate in good faith to extend this date, or alternatively, may agree that loan amounts and interest accrued convert into Genesis shares.
To have secured access to a $3 million facility on unusually favourable terms is a significant endorsement and vote of confidence in Genesis' projects and management.
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