Infinito Wades Through Costa Rican Legal Battle

It pays to have investors that believe in your cause.

Infinito Gold (IG-V, IGFFF-O) has announced that its bondholders have again agreed to waive default rights on their notes in connection with the company being unable to make interest payments.

If only all companies had such understanding creditors. But in Infinito’s case, the note-holders are also the largest investors in the company and clearly have its long-term success foremost in their minds.

Towards that end, they have granted the company another month-long extension — the fourth consecutive reprieve — to give Infinito a chance to get its Crucitas gold mine, in Costa Rica, up and running.

The would-be mine was put on the bricks last year just before shovels were set to begin digging the open pit. The deposit at Crucitas hosts an indicated resource of 1.2 million oz. gold from rock with an average grade of 1.32 grams gold.

A quirk in the Costa Rican legal system allows any complaint to be brought before the Supreme Court, so a local activist who has long been a thorn in Infinito’s side was able to easily take his claim against the company before the country’s highest court.

Since that time, the company has anxiously awaited a verdict.

Firstly, the court is considering the activist’s complaint that the president of Costa Rica, Oscar Arias, had no right to grant Infinito a mining permit in the first place. If the court rules that the president was within his rights, then Infinito is likely to win a second ruling that would pave the way for it to start construction, with no further interruptions.

Infinito has $50.5 million in secured convertible notes that are held by its largest investors, Exploram Enterprises and Auro Investments. Combined and on a fully diluted basis, the two companies hold roughly 90% of Infinito’s shares.

Exploram, which is Infinito’s largest shareholder, is controlled by Calgary-based billionaire Ron Mannix, who has been a long-time investor in the project. Auro is a company associated with Steven Dean, Infinito’s chairman.

Infinito is only able to draw down from its project debt financing — which it will use to make interest payments on its notes — once it is allowed to restart construction at Crucitas.