Junior sulfate of potash developer Crystal Peak Minerals Inc., Toronto, said on Sept. 9 that the challenging market conditions announced last month (GM Aug. 28, p. 36) have continued, creating a significant impact on the company’s ability to raise financing for the development of the Sevier Playa project in Utah.
In spite of its efforts, the company updated that unless further funding is obtained before the end of September, Crystal Peak expects its cash balance to drop below the $500,000 minimum cash balance covenant included in the convertible note agreement with EMR Capital Investment (No. 5B) Pte. Ltd., an affiliate of EMR Capital Resources Fund 1 LP (EMR).
While the company said it is working with EMR in relation to the potential breach and is assessing all available options, including a restructuring of the company, to date EMR has advised that it is not prepared to delay exercising its rights under the convertible note agreement, including enforcement of its security interests.
Crystal Peak said it will work with its financial advisor to seek any and all financing alternatives, up to and including the sale of the company or its assets. It said any credible offer must be received as soon as possible, but in any event prior to the end of September, when the company expects to breach the note. This will likely result in EMR foreclosing on the company’s subsidiary, Peak Minerals Inc., which holds the Sevier Playa project.