Replies to post #11712 on KAT Exploration Inc (KATX)

[Zorro]

It's not a loan. The co. basically sold them shares as investors in the company. The way I understand it is that the financing was secured with 50M restricted shares upfront in exchange for $1M to be drawn on over the next six months (like a line of credit), and the remaining $4M pegged to specific goals being reached over the next 6 months. Now they are planning to use these funds for operational support over the next 5 years.



The funding contract guarantees $1 million over the next 6 months and the remaining $4 million to be delivered upon agreements within the contract being achieved over the course of the following 6 months of no specific date. The funding is to provide operational support for Kat for at least the next 5 years.

The funding was secured with 50,000,000 restricted shares.

[Er0ck]

It's no loan, thats for sure. These types of deals typically involve the company (KATX) selling a agreed upon number of shares to the private investors at a discounted price for access to capital.

While I don't know the exact terms of this deal, it would be highly unlikely for this company to pay market price for these shares, at that point they might as well just buy them their selfs.

KATX sold the 50 million shares to them at a heavily discounted price. In return KATX got access to 1 million in capital that they can draw from for the first 6 months. And then as the company meets certain pre-agreed milestones they will gain access to the rest of the money.

The shares KATX gave them were not part of the float. These shares will increase our outstanding shares number by 50 million, but these shares will not enter the float for at least a year due to restrictions placed on them. While I do not know exactly what the terms are, I know for a fact that at the very least they are not allowed to sell these shares for at least a year.

It's a win/win for both the private investors and KATX. The investors stand to make a killing on their 50 million shares that they got at a big discount, and KATX of course gets access to FREE capital that they don't have to worry about making loan payments on and interest rates.

KATX now has all the money they need to not just fund the test drills for handcamp, but for rusty ridge and any of their other properties, as well as all the other important aspects of running a company like this.

So why is that important that they got this money now, instead of signing a JV with a mining company and have them pay for the test drills?

With KATX getting their own capital to cover the cost of their test drilling and other aspects of the company, they now can do all of the work them selfs and pay for it them selfs. Meaning that once the test results come back from Handcamp and they start to shop it around as a Joint Venture property, they now can command a much better partnership with a mining company since all of the work has already been done and that is left is to mine. If they didn't pay for the test drills and the lab test etc before signing a JV, the mine would have to front even more money to cover the cost of all that work too. Meaning it would be even longer before KATX sees a profit from their property and that profit would also be much smaller than it will be now.

This was a fantastic deal and one that might not pay off with a big jump in the pps up front, but a few months down the road it's going to be the key factor on the back in when the pps really starts to expload.

Anywho, almost time for me to get my drink on! :)