via SEDAR - Waterton Prepaid Lending

As I have said before, the Waterton lending facility has a prepaid clause, and was probably entered into after Q2, fiscal 2012, meaning the end of 2011.

That means any money lent might have been prepaid by GBN.V. Thus we begin losses, and drastic curtailments in production. We have also had a wild goose chase in the meantime, of proposed projects, exploration activities and preposterously absurd results, coupled with patently false announcement of mill shut downs, twice over. The fact that the Mill Zone has seen extensive de-risking unannounced should not be overlooked.

However, the following part of the lending agreement must not be ignored:

"“Escrow Agent” means Olympia Trust Company.

“Escrow Agreement” means an escrow agreement to be entered into among the Borrower, the Lender and the Escrow Agent, pursuant to which the Escrow Agent would hold the Transfer of Claims on terms and conditions satisfactory to the Lender acting reasonably." <= this is the only time an escrow agreement is mentioned.

As you can see, there is an escrow arrangement as part of the Waterton lending facility, meaning that gold can be held in escrow prior to settlement. This is where the gold is going, and production is subordinated to that end.

And:

"“Sprott Option” means the right of Sprott Asset Management L.P. to purchase certain gold produced by the Company pursuant to the Right of First Refusal Agreement between the Borrower and Sprott Asset Management L.P. dated August 31, 2010. "

Waterton was there merely to facilitate an agreement whereby Sprott has the right of first refusal to buy gold held in escrow.

The stated maturity date is August 3, 2014. (I assumed there would be a toggle price, but this is not the case.) But the Waterton lending facility appears to facilitate a mezzanine capital arrangement.

How high do you think the gold price will be in six months time?

-F6