Costa Rica: Is this the final battle over gold mine?Published by MAC on 2009-11-16
Source: Tico Times, PRNewswire (2009-10-30)
It's Costa Rica's most controversial new mine project, already delayed by more than a year, due to civil opposition and legal challenges. See: http://www.minesandcommunities.org/article.php?a=8857
As the case, for and against the mine, returns to the country's Supreme Court, the Canadian company behind the enterprise has, for the fifth time, failed to pay interest to holders of US$50 million worth of convertible notes - loans which can be exchanged for shares at a future date.
Costa Rican court sets date for gold mine dispute hearing
By Mike McDonald, Tico Times Staff
28 October 2009
A one-day hearing for the controversial open-pit gold mine project in Las Crucitas near the Nicaraguan border is scheduled for Nov. 12 in Costa Rica's Constitutional Chamber of the Supreme Court (Sala IV), court press officials confirmed Tuesday.
Supreme Court justices will hear from Industrias Infinito S.A, a subsidiary of the Canadian company that proposed the mine, and from those who oppose the project.
Judges will analyze legal aspects of the government permits that have been issued for the mine's construction and operation.
In 2005, the National Technical Secretariat of the Environment Ministry (SETENA) issued an environmental viability permit allowing the company to clear 126 hectares of trees in order to build the mine and accompanying facilities. That area was reduced to 50 hectares in February of 2008.
Opposing parties argued whether cutting down the trees violated article 50 of the Costa Rican constitution, which ensures a “healthy and ecologically balanced environment ” for the nation's citizens. The Supreme Courted halted all activity at the mine in Las Crucitas on Oct. 20, 2008.
The project, partially constructed, has been in limbo ever since.
Officials said a decision regarding the legal and constitutional viability of the mine is the next step after the hearing. Judges do not have a deadline to reach their decision.
Infinito Noteholders Waive Defaults Arising From Delay of Decision in Costa Rican Court Proceedings
30 October 2009
CALGARY - Infinito Gold Ltd. (the "Company") announces that it has received waivers of events of default under the outstanding $50,500,000 Secured Convertible Notes (the "Notes") of the Company held by Exploram Enterprises Ltd. ("Exploram") and Auro Investments Ltd. ("Auro", and together with Exploram, the "Noteholders").
When the Notes were issued, the Company and the Noteholders expected the current Costa Rican legal challenge to the grant of a change of land use permit for the Crucitas mine before the SALA IV in Costa Rica would be resolved in time to permit the Company to complete the drawdown of funds under a project debt financing facility to finance commencement of construction at the Crucitas project by September 30, 2009. Consistent with this view, the Notes provided that it would be an Event of Default if the Sala IV proceedings had not been resolved favourably by June 30, 2009 and if the first drawdown under a project debt financing facility did not occur by September 30, 2009 and the first interest payment due under the Notes was payable on September 30, 2009.
As the court proceedings have not been resolved, the Company has not completed a drawdown under a project debt financing facility and does not have the funds to fund payment of interest due on September 30, 2009. The Noteholders have granted the Company a waiver of the events of default associated with its non-compliance with each of these provisions until November 30, 2009. In addition, as of September 30, 2009, the Company owed $4.4 million in accrued interest, plus structuring fees of $510,000 to the Noteholders, and the Noteholders have agreed to defer payment of these fees by the Company (and waived the defaults related to non-payment) until November 30, 2009. Interest is accruing on these unpaid amounts at a rate of 15% per annum.
These waivers represent the fifth time since June 30, 2009 the Noteholders have waived events of default relating to the delay in receipt of a decision by the SALA IV, each previous waiver having been given for a period of approximately one month.
Exploram is the controlling shareholder of the Company and Auro is a company associated with Steven Dean, the Company's Chairman.