Colibri Resource Corp (CBI.V) has announced it has entered into a deal with Agnico Eagle Mines (AEM, AEM.TO) whereby the latter will lend Colibri US$300,000 so the company can continue its exploration activities on the El Mezquite and Evelyn gold projects in Mexico.
The loan will be maturing in two years after the issue date and have a 10% coupon. The interest on the loan will compound until the maturity date which means Colibri will have to come up with US$363,000 in November 2021 to fully repay the loan. Should Colibri be unable to do so, Agnico Eagle may issue a default notice and take the Colibri stake in the Pitaya joint venture in lieu of the cash payment. An interesting development, especially as Colibri also announced it has extended the original period for Agnico Eagle to market the Pitaya property to prospective buyers. Agnico will now be allowed to market the property until November 2021.
Colibri will use the cash to drill its Evelyn project in the near term while it’s also getting the El Mezquite project ready to be drilled.
Disclosure: The author has a long position in Colibri.