Item
1.01 Entry into a Material Definitive Agreement.
As
previously disclosed on February 13, 2017, Gold Torrent, Inc. (the “Registrant”) entered into a Convertible Preferred
Note and Investment Agreement (the “Purchase Agreement”) with CRH Mezzanine Pte. Ltd., a Singapore private limited
company (the “Preferred Note Investor”) and CRH Funding II Pte. Ltd., a Singapore private limited company (the “Stream
Investor”) for a $2,000,000 convertible preferred note and a $11,250,000 gold and silver prepayment arrangement for the
Registrant’s Lucky Shot Gold Project (the “Project”) near Anchorage, Alaska.
On
February 14, 2017 the Registrant received $1,900,000 in proceeds from the note, net of legal expenses, to be used as part of the
Registrant’s initial investment in the Project.
Concurrent
with the closing and funding of the convertible preferred note, the Registrant and Miranda U.S.A., Inc., a wholly-owned subsidiary
of Miranda Gold Corp of Canada (“Miranda”), executed a joint venture operating agreement and formed Alaska Gold Torrent,
LLC, an Alaska limited liability company (“Alaska Gold”) under which the Registrant owns a seventy percent (70%) undivided
interest in the Project.
On
June 27, 2017, the Registrant, Alaska Gold and the Stream Investor agreed, after the satisfaction by the Registrant of a majority
of the Tranche 1 closing conditions, to amend certain provisions of the Streaming Agreement and concurrently close on one-half
of Tranche 1 in the amount of $3,250,000. On August 8, 2017, the Registrant and the Stream Investor consummate the closing of
the second half of the first tranche, also in the amount of US $3,250,000, having satisfied the final closing conditions.
Alaska
Gold is subject to certain events of default under the Gold and Silver Prepayment Agreement including if, from the date of the
Tranche 1 drawdown, Alaska Gold fails to produce at least 5,000 and deliver to the Stream Investor at least 1,000 Ounces by the
18th month; produce at least 10,000 and deliver to the Stream Investor at least 2,000 Ounces by the 24th month; produce 20,000
and deliver to the Stream Investor at least 4,000 Ounces by the 36th month; deliver to the Stream Investor at least 10,000 Ounces
by the 48th month; deliver to the Stream Investor at least 19,400 Ounces by the 60th month; and deliver to the Stream Investor
at least 23,900 Ounces by the 72nd month.
In
consideration for the commitments under the Purchase Agreement the Registrant issued the Preferred Note Investor share purchase
warrants (the “Warrants”) exercisable to purchase two million shares of the Registrant’s common stock at an
exercise price of US $0.50 per share. The Warrants expire three (3) years after the date of issuance. In conjunction with the
transaction, the Registrant and the Preferred Note Investor entered into an Investor Rights Agreement which, among other things,
allows the Preferred Note Investor: the right to appoint one member to the Registrant’s Board of Directors so long as the
Preferred Note Investor owns at least 10% of the Registrant’s outstanding Common Stock; observer rights so long as the Preferred
Note Investor owns at least 5% of the Registrant’s outstanding Common Stock; a right of first offer on certain, future non-equity
financing; subscription rights for future debt and equity financings up to the Registrant’s pro rata ownership of the Registrant’s
common stock; demand and piggy-back registration rights; and the obligation of the Registrant to have its securities listed on
a Canadian securities exchange within twelve (12) months. The Registrant also entered into an Indemnification Agreement in favor
of the Preferred Note Investor.
On
October 21, 2017 Registrant advised its JV partner Miranda that, due to an approved increase in the project capital expenditure
budget, the parties would be required to contribute additional cash to fund the excess. On November 23, 2018, Miranda elected
not to contribute is $4.5 million required capital and entered into a letter agreement to sell its 30% interest in Alaska Gold
to Registrant. The terms of the sale agreement required Registrant to make the additional capital contribute on behalf of Miranda
and make certain other payments of share and cash over time to be closed upon completion of the financing and initiation of a
Canadian listing. The Registrant expected to initiate a Canadian Going Public Transaction, as defined in the Convertible Preferred
Note agreements, on or before May 16, 2018.
On
April 21, 2018 the Registrant, Alaska Gold, Preferred Note Investor and Stream Investor entered into a letter agreement amending
the Gold and Silver Prepayment Agreement to extend the $4.75 million Tranche 2 drawdown deadline from March 30, 2018 to September
30, 2018 provided that the Registrant secured $11 million in additional capital with $4.5 million required on or before May 15,
2018 and $6.5 million before September 30, 2018. The letter agreement also amended the Convertible Preferred Note to change the
conversion rate from 15% of the original April 30, 2018 post-financing number of the Registrant’s shares of common stock
to 20% of the revised May 15, 2018 post-financing Registrant shares. The amendment also required certain members of the Registrant’s
management to convert their past due salaries payable to shares and to accept compensation in lieu of all cash payments to a combination
of shares and cash at the planned closing on May 15, 2018.
From
January 2018 through May 14, 2018, the Registrant engaged several brokerage firms and agents to help arrange a non-brokered private
placement to accredited investors and raise the required $11 million additional capital. Certain investor funds were held in escrow
subject to terms of subscription agreements that required the entire $4.5 million be raised by May 15, 2018 or the escrow held
funds would be returned to subscribers. On May 15, 2018, the escrow agent returned the held funds to subscribers according to
the terms of the subscription agreements because the Registrant was unable to the $4.5 million in capital.
Upon
the return of the escrowed funds, the Registrant worked to find additional financing proposals acceptable to Alaska Gold, Preferred
Note Investor and Stream Investor.
On
June 27, 2018, the Registrant received (i) a Notice of Default by Alaska Gold Torrent under the Gold and Silver Prepayment Agreement,
(ii) a Notice of Default by Gold Torrent, Inc. and Gold Torrent (Canada) Inc. under the Secured Convertible Preferred Note, and
(iii) a Notice of Default to Guarantor under the Guarantee by Gold Torrent, Inc. and Gold Torrent (Canada) Inc.
On
July 3, 2018, the Registrant entered into a Membership Transfer and Assignment Agreement, whereby the Registrant transferred its
ownership in Alaska Gold to the Stream Investor for the consideration of the Stream Investor assuming all of the existing obligations
of the Registrant and Miranda under the Alaska Gold Operating Agreement and that each of the Registrant and its related parties
are released from all liability on such assumed obligations and any new obligations under the Purchase Agreement and the Note
arising after the date of transfer.
This
Current Report on Form 8-K contains forward-looking statements that involve risks and uncertainties. The risks and uncertainties
involved are detailed from time to time in the Registrant’s periodic filings with the Securities and Exchange Commission.
