Effective December 29, 2011, the Registrant entered into an agreement ("the Agreement") with Tangiers Investors LP, ("Tangiers") pursuant to which the Company received $50,000 as a loan from Tangiers. As the Agreement specifies, loan proceeds will only be used towards expenses related to the Ruby Mine Project.
The Agreement is structured as a $25,000 Promissory Note (the “Promissory Note”), and a $25,000 Convertible Promissory Note (the “Convertible Note”).
The Promissory Note has a maturity date of six (6) months from the Effective Date, and an interest rate on the unpaid principal balance equal to 9.9% per year. The Registrant shall make cash payments to Tangiers every two (2) weeks beginning January 1, 2012, at a minimum of $2,500 against the principal and accrued interest until the Promissory Note has been satisfied. The Registrant has further authorized Tangiers to debit this amount directly from any drawdowns made on Registrant’s existing Equity Line of Credit (“ELOC”) with Tangiers. As further consideration, Tangiers shall be entitled to 250,000 5-year warrants to purchase 250,000 shares of our common stock at an exercise price of $0.115 per share.
The Convertible Note is convertible into common stock, in whole or in part, at any time and from time to time before maturity at the option of the holder at a fixed price of $0.08 per share, which was the closing market share price on the Effective Date. The Note has a term of nine (9) months and accrues interest at a rate equal to 9.9% per year.
The Agreement further specifies that there shall be no penalty for prepayment of either the Promissory Note or the Convertible Note.
Concurrent with the execution of the Agreement with Tangiers and effective December 29, 2011, Ruby Development Company (“RDC”) has agreed to reduce the Registrant’s monthly mortgage payments on the Ruby Mine property from $85,000 per month to $10,000 per month until March 31, 2012, or receipt by the Registrant of its expected funding through the federal EB-5 Program, whichever comes first. A full description of the Ruby Mine and the federal EB-5 program as it relates to project funding for the Ruby Mine is disclosed in the Company's Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 16, 2011. In consideration of the reduced payments, RDC shall be entitled to 2,000,000 5-year warrants to purchase 2,000,000 shares of our common stock at an exercise price of $0.09 per share.
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