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Wednesday, February 26, 2020 9:25:55 AM
Borrowing money to pay off debt is common with every start of company until the product is produced and sold.
Yes. However, the terms of the debt matter. Companies typically structure long term debt against the potential assets (in the case of miners it would be the amount of gold reserves). Since Mexus took a calculated gamble and opted to save money in the short-term by skipping the feasibility study stage it does not have a study that meets an acceptable standard to establish reserves.
As a result, it is now forced to use the secondary loan market to generate cash flow.
The terms of the secondary market are both high interest (8% and higher which is quadruple the prime interest rate) and they are short-term in length (12 months or less).
This puts us in the current spot of now we have to not only finance our operations with debt, but we have to constantly refinance our existing debt in addition to operations.
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