Hamilton, Bermuda-based Richland Resources Ltd. entered into a US$500,000unsecured loan facility with two of its directors and a long-term shareholder,the company said June 28.
Directors Edward Nealon and Nicholas Sibley providedUS$150,000 each, while Ashwath Mehra, Richland's long-term shareholder providedUS$200,000.
The facility has a 12-month term and carries a 10% annualinterest rate, which is payable quarterly in arrears. It also prohibits thecompany from pledging any assets to other creditors without the lenders' priorconsent.
In case of early repayment, the company is required to pay aminimum interest of 7.5% on the total principal amount.
The board believes that the loan facility avoids equitydilution for shareholders and will help the company with its ongoing workingcapital requirements. In addition, it will provide the company financialflexibility while it expands its sales channels.
"The last six months have seen significant progress atour Capricorn sapphire mine as we continue to develop long-term sales channelsand optimize operations, and we remain on course to meet our ramp-up targets.With an updated JORC resource estimate recently established and a comprehensive12-month mine-plan in place, we have now secured this loan facility from anexisting shareholder and two directors to support the company during thisdevelopment phase," CEO Bernard Olivier said.