Notes Payable |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NOTES PAYABLE | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Payable | NOTE 8 – NOTES PAYABLE
(A) ADVANCE CREDIT LINE FACILITY/CUSTOMER ADVANCES
On February 4, 2021, the Company entered into an Advance Credit Line Facility and Purchase Agreement (the “ACL”), with a commercial buyer. On August 2, 2023, the ACL was extended through December 2026 in an Amendment Agreement (the “Amendment”). Under the terms of the ACL and Amendment: • The Company will deliver 100% of its produced concentrates to the buyer and provider of the ACL, through December 31, 2026, with evergreen annual extensions thereafter until either party terminates with at least 365 days’ notice; • An initial ACL was established by the buyer in the amount of $3.75M USD. • On May 1, 2021, the ACL increased to an amount equal to 80% of the prior 3 months’ revenue. • Each successive month, the ACL shall be adjusted according to the Company’s prior 3 months’ revenue to a maximum advance line of $17.5 million as specified in the Amendment. • The ACL shall never be less than $3.75M USD. • The ACL will be interest free for 45 days. • The ACL is to be repaid through deliveries of concentrates or cash within 120 days. • Beginning in September 2023, up to $10M of the ACL advance may be converted into a one-year installment loan (the “RCL”) bearing interest at 3M SOFR + 7.5% and amortized as follows: Month 1, interest only; Month 2-11, 5% principal plus interest; and Month 12, final 50% principal plus interest. Converting the advance amount into an installment loan will reduce the available on a pro rata percentage basis; • If the ACL is converted into the RCL subsequent deliveries during the term of the loan will be paid in cash within ten days of delivery; • The Amendment provides the buyer with a right of first refusal during the Commercial Offtake Agreement, to provide offtake financing and purchase other concentrates (zinc, silver, copper, etc) and doré from the Company’s open pit and underground operations. The ACL was included under Customer Advances on the consolidated balance sheet, prior to December 1, 2023. Deposits under the Advance Credit Line Facility Under the terms of the ACL, the Company received the following advances from the buyer (in millions): (1) $9.35 advance on December 28, 2022. Settled on February 16, 2023. (2) $9.60 advance on February 21, 2023. Settled on March 31, 2023. (3) $9.20 advance on March 31, 2023. Settled on May 17, 2023. (4) $9.85 advance on May 18, 2023. Settled on June 28, 2023. (5) $10.0 advance on June 29, 2023. Settled on August 14, 2023. (6) $10.75 advance on August 17, 2023. Settled on September 16, 2023. (7) $9.75 advance on September 29, 2023. Converted to a one-year note payable on December 1, 2023. (B) REVOLVING CREDIT LINE (RCL) & TEMPORARY ADVANCE CREDIT LINE (TACL) On December 1, 2023, the Company exercised its option under the ACL to convert the outstanding ACL balance of $9,750,000 into a one-year note payable (the “RCL”) bearing interest at 3M SOFR + 7.5%. The RCL is repayable as follows: Month 1, interest only; Month 2-11, 5% principal plus interest; and Month 12, final 50% principal plus interest. On June 20, 2024 the Company amended the terms of the RCL. Under the amended agreement the Company may receive up to an additional $4,000,000 (the (“TACL”) at the same interest rate due on November 30, 2024. The Company also received a put option (the “Put Option”) to convert up to $9,000,000 of the RCL into common stock at $1.61 a share exercisable from November 1, 2024 until the November 30, 2024 maturity date. If the TACL and the RCL are repaid in full on or prior to the maturity date, the maximum principal amount of the RCL will be increased to $12,500,000. If the Put Option is exercised for more than $4,000,000, however, the maximum principal amount of the RCL will be reduced on a dollar-for-dollar basis by such excess. As part of the June 20, 2024 amendment, the Company granted a security interest in the Company’s Mexican IVA tax claims to the holder of the RCL and TACL notes. In November 2024 the Company paid off the TACL and renewed the RCL for one year. Under terms of the renewal the TACL was discontinued and the put options was removed. The $12,500,000 maximum principal amount, interest rate and payment terms remained the same. The following is a summary of the activity during the years ended December 31, 2024 and 2023:
Interest expense for the year ended December 31, 2024 was $1,249,098 (2023- $108,098). |
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