An agreement-in-principal calls for the restructuring of an outstanding loan of $1.9 million owed by a wholly owned subsidiary of Nova Gold Resources (TSE).
The loan was incurred by Murray Brook Resources to finance construction of the Murray Brook gold-silver mine in New Brunswick. NovaGold guaranteed the loan.
Although $2.1 million on the loan was repaid, operations at the mine were discontinued in May, 1992, and the principal amount of $1.9 million was left in arrears.
The creditor, the National Bank, agreed to postpone the payment due date until May 31, 1996, after NovaGold agreed to issue more than 10.8 million shares as substitute security.
The shares will be sold and proceeds will be applied to reduce the outstanding principal on the loan. It is expected the securities could be sold one year after their issuance. If the loan is fully retired by May 31, 1996, any remaining securities will be returned to NovaGold.
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