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Para Resources locks in US$1M gold loan, ups credit facility to US$5M

Para Resources Inc. secured a US$1 million gold loan from one of its directors on more favorable terms than an earlier deal with Cartesian Capital.

The Vancouver-based explorer on Jan. 27 said the senior secured loan is being provided by Conex Services Inc., a company controlled by Para Resources director Glenn Walsh, who is also a major shareholder.

The loan, which is being provided to subsidiary Colombian Milling Ltd., will be used for working capital to fund the El Limon mine in Colombia.

To repay the loan, Para Resources can either deliver 1,250 ounces of gold at an assumed market price of US$1,160 per ounce or pay the cash equivalent within 21 months of the closing date of the deal.

Para Resources has also negotiated a US$2.0 million increase in its credit facility with Conex to US$5.0 million and an extension to Dec. 31.

The extra cash will be used to fund the company's earn-in requirements for the Finaris gold-silver mine and Las Lomas de Casma processing plant in Peru.

Para Resources recently struck a deal to earn up to a 75% interest in the mine and plant, which are owned by Mining and Solutions Construction Group SA.

The company said it has terminated the letter of intent with Cartesian Capital.