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TORONTO, March 27 /CNW/ - Silk Road Resources Ltd. (TSX-V: SIL) ("Silk
Road" or the "Company") announces that is has obtained an unsecured loan (the
"Loan") in the aggregate amount of US$690,000 from a group of individual
lenders (each a "Lender" and together, the "Lenders"). The Company shall use
the Loan to repay its outstanding indebtedness in the amount of US$555,000 due
March 31, 2009 in respect of the Bulagou mining property in Gansu Province,
China (the "Project").
Upon payment and subject to receipt of all necessary Chinese regulatory
approval, the Company will have completed the acquisition of an additional 20%
interest in the Project, increasing its aggregate interest in the Project to
90%. The Project is a gold exploration property and, as previously announced
by the Company, recent drilling activities have suggested that significant
gold mineralization may exist at the Project. The acquisition of the
additional 20% interest will permit the Company to realize the full value of
the Project, either through production or through a sale of the Project. As
previously announced, the Company is pursuing a proposed business combination
with EurOmax Resources Ltd. ("EurOmax") and realizing the full value of the
Project is a strategic component of the proposed business combination.
The Company intends to use to the additional proceeds of the Loan to
cover costs related to the 20% acquisition, maximizing the Project value and
entering into the proposed business combination with EurOmax.
The Loan will be evidenced by a promissory note issued to each Lender for
their respective amount of the Loan. The Loan matures on September 23, 2009
(the "Maturity Date") and will accrue interest at a rate of 2% per month for
the six month term. The principal, accrued interest and a 10% bonus interest
payment will be payable to each Lender on the Maturity Date. The Company has
the option to prepay any amount under the Loan at any time after June 23,
2009.
US$90,000 of the Loan is being provided by individuals who are not acting
at arm's length to the Company.
Certain of the Lenders (each a "Secured Lender") have entered into a
stand-by commitment agreement (the "Commitment Agreement") with Anthony
Patriarco, a director and the largest shareholder of the Company, whereby Mr.
Patriarco will pledge certain securities held by him with an aggregate current
value of approximately two times the principal amount of the Loan (the
"Principal") as collateral (the "Collateral") for the Company's obligations to
the Secured Lenders in respect of the Principal. In case the Company is unable
to repay the applicable amount of the Principal to a Secured Lender on the
Maturity Date, such Secured Lender will have recourse against the Collateral,
subject to the terms of the Commitment Agreement.
Certain information regarding the Company set forth in this press
release, including management's assessment of the Company's future plans and
operations contains forward looking statements that involve substantial known
and unknown risks and uncertainties. These forward looking statements are
subject to numerous risks and uncertainties, some of which are beyond the
Company's and management's control, including but not limited to, the impact
of general economic conditions, industry conditions, fluctuation of commodity
prices, fluctuation of foreign exchange rates, imperfection of reserve
estimates, environmental risks, industry competition, availability of
qualified personnel and management, stock market volatility, timely and cost
effective access to sufficient capital from internal and external sources. The
Company's actual results, performance or achievement could differ materially
from those expressed in or implied by, these forward looking statements and
accordingly, no assurance can be given that any of the events anticipated to
occur or transpire from the forward looking statements will provide any
benefits to the Company.
