Credit Line |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Credit Line | NOTE 7 - CREDIT LINE
(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: • Beginning in September 2023, up to $10 million of the ACL advance may be converted into a one-year installment loan (the “RCL”) bearing interest at + 7.5% and amortized as follows: Month 1, interest only; Months 2-11, 5% principal plus interest; and Month 12, final 50% principal plus interest. Conversion into an installment loan reduces the available ACL on a pro rata basis; • If the ACL is converted into the RCL, subsequent deliveries during the term must be paid in cash within ten days of delivery; • The Amendment provides the buyer with a right of first refusal under the 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. (B) Revolving Credit Line (RCL) & Temporary Advance Credit Line (TACL) In addition, during November 2025 and December 2025, the On December 1, 2023, the Company exercised its option under the ACL to convert the outstanding balance of $9,750,000 into an RCL. The RCL is repayable as follows: Month 1, interest only; Months 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 amendment, the Company could receive up to an additional $4,000,000 under a temporary advance credit line (the "TACL”) at the same interest rate, with the TACL maturing on November 30, 2024. As part of the amendment, the Company also received a put option (the "Put Option”) allowing it to convert up to $9,000,000 of the RCL into common stock at $1.61 per share, exercisable from November 1, 2024 until the November 30, 2024. If both the RCL and the TACL were repaid in full on or before November 30, 2024, the maximum principal amount of the RCL would increase to $12,500,000. However, if the Put Option was exercised for an amount greater than $4,000,000, the maximum principal amount of the RCL would be reduced on a dollar-for-dollar basis by the excess. As part of the June 20, 2024 amendment, the Company granted a security interest in its Mexican IVA tax claims to the holder of the RCL and TACL notes. In November 2024, the Company repaid the TACL in full and renewed the RCL for an additional one-year term. Under the renewal, the TACL was discontinued, and the Put Option was removed. The maximum principal amount of $12,500,000, the interest rate, and repayment terms remained unchanged.
(C) Amendment to Offtake Agreement and Credit Facility
On August 22, 2025, DynaMexico entered into an amendment (the “Offtake Amendment”) to the Gold Concentrate Purchase Agreement originally dated February 1, 2021 (as amended, the “Offtake Agreement”), with MK Metal Trading Mexico S.A. de C.V. (“Buyer”) and Ocean Partners UK Limited (“Ocean Partners UK”). The Offtake Amendment: • Extends the term of the Offtake Agreement through December 31, 2030, with automatic annual renewals unless terminated by either party with 365 days’ notice; • Adds Ocean Partners UK as a joint buyer under the Offtake Agreement, with full rights and obligations; • Establishes a new $15 million Concentrate Credit Facility (the “Credit Facility”), replacing the prior $12.5 million facility, with principal repayable in equal monthly installments over months 7 through 24, bearing interest at plus 6.75%; • Introduces a $3 million termination fee payable by DynaMexico to Buyer under certain conditions; and • Provides security for the Credit Facility, including a parent company guarantee from the Company, a general security agreement, and a pledge of DynaMexico shares. The Credit Facility is structured as a 24-month loan. For the first six months of the loan tenor, DynaMexico is required to make interest-only payments. Beginning in month 7 and continuing through month 24, the loan is repayable in 18 equal monthly principal installments, plus interest. Concurrent with the Offtake Amendment, DynaMexico and Ocean Partners UK entered into the Credit Facility, and the Company executed a Parent Company Guarantee in favor of Ocean Partners UK, guaranteeing DynaMexico’s obligations under the Credit Facility. The following is a summary of activity during the periods ended June 30, 2026 and December 31, 2025:
Interest expense on the RCL for the periods ended June 30, 2026 and 2025 were $756,680 and $554,252, respectively. |
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