November 4, 2011 Vancouver, Canada - 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 Partnership ("Sprott").
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 setbacks."
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,
"Richard Goodwin"
Richard Goodwin
President and COO
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 securities laws.
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