Firstgold negotiates forbearance agreement for $2.4 million in debt

By Devika Patel

Knoxville, Tenn., March 31 - Firstgold Corp. said it negotiated a forbearance agreement with its lenders.

The company is in default for not making principal and interest payments on a loan. It owes approximately $2.4 million.

In return for signing the agreement, which includes a "standstill" until April 30, the lenders may convert $4 million of the outstanding debt. The debt is convertible into common shares at $0.145 per share.

This conversion right may be extinguished if the company cures the default.

If the conversion privilege is used, the amounts converted will be applied first to unpaid interest and then to unpaid principal. In addition, until the amounts owed are paid up, the lenders will receive the first $600,000 of production revenue on a monthly basis. The company will receive the next $600,000 and the remainder will be split equally between the lenders and the company. The revenues paid to the lenders will be applied to outstanding debt payments.

"Completing this agreement and achieving gold production are important steps in establishing a firm financial platform for the company. We are now looking toward the continued development of the Relief Canyon mine and our other exciting projects," chief executive officer Steve Akerfeldt said in a press release.

Firstgold is a mining company based in Cameron Park, Calif.

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