UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
November 18, 2005 (November 14, 2005)
CAPITAL GOLD CORPORATION
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(Exact name of registrant as specified in its charter)
Nevada 0-13078 13-3180530
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(state or other juris- (Commission (I.R.S. Employer
diction of incorporation) File Number) (Identification No.)
76 Beaver Street, New York, NY 10005
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 344-2785
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[_] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Section 8 - Other Events
Item 8.01 Other Events.
As noted in our Current Report on Form 8-K filed on February 2, 2005 we mandated
Standard Bank Plc, formerly, Standard Bank London Limited ("Standard Bank") as
the exclusive arranger of a project finance facility of up to US$10 million for
our El Chanate gold mining project in Sonora State, Mexico and associated
hedging. On November 14, 2005, we received a commitment letter from Standard
Bank informing us that its credit committee had approved the Standard Bank's
arranging and providing for a senior project finance facility for up to US$12
million for the development of our El Chanate project.
The terms and conditions contained in the commitment letter and the term sheet
attached thereto are indicative only and actual funding is subject to the
negotiation of and execution of satisfactory definitive documents as well as
satisfaction of certain conditions, including raising the additional funds
necessary for construction and working capital, there occurring no events that
materially adversely affect our business, operations or financial condition and
there being no material deterioration in the gold price. The commitment expires
on January 31, 2006 if not funded by that date.
According to the term sheet included with the commitment letter, Minera Santa
Rita S. de R.L. de C.V. and Oro de Altar S. de R. L. de C.V., two of our
wholly-owned Mexican subsidiaries (the "Borrowers"), will borrow up to US$12
million from Standard Bank. The loan proceeds will be used to fund project costs
related to the El Chanate project . The loan will mature in five years after the
closing date and bear interest at 4% plus the 1,2,3 or 6 month Libor rate. The
loan will be repayable in 14 quarterly installments commencing on a date to be
determined. In addition, on each installment date, we will be required to apply
50% of excess cash flow towards prepayment of the loan. The loan will be secured
by all shares and all of the assets of the Borrowers, The loan will also be
supported by our guarantee and we will be required to maintain a minimum cash
liquidity balance in an amount to be determined.
We (the Borrowers and/or us) will be required to deposit all cash proceeds we
receive from operations and other sources in an off-shore proceeds account,
which will be subject to Standard Bank's security interest. Absent default by us
under the finance documents, funds from this account will be used for specific
purposes such as approved operating costs, budgeted capital expenditures,
hedging costs and funds payable to Standard Bank under the finance documents. As
additional security, we also will be required to fund an offshore debt service
account ("DSRA") and maintain a minimum balance of US$1,800,000.
We will be required to meet and maintain certain financial covenants and conform
to certain customary affirmative and negative covenants, such as restrictions on
sale of assets. We also will be required to enter into a gold price protection
program that mitigates the risk of downward movement in gold prices by entering
into an acceptable hedging program and we will need to structure a hedging
program to mitigate interest rate risk and foreign exchange risk, all in a
manner satisfactory to Standard Bank.
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The facility will close and funding will be available upon satisfaction of
certain conditions precedent. In addition to customary conditions precedent such
as execution of definitive documents, the absence of events of default and
satisfactory representations and warranties, closing and funding of the facility
will be subject to: (i) Standard Bank's determination that we have hired
appropriate additional management to provide construction, operations and
financial management and oversight; and (ii) our raising sufficient equity
funding, net of expenses, that, along with cash on hand, is adequate to cover
all required project equity contributions, pre-completion funding of the DSRA
and other cash requirements prior to Economic Completion (the date upon which
Standard Bank determines that all covenants and completion conditions have been
met over a period of 90 consecutive days and are sustainable over the life of
the project), and to meet a certain minimum liquidity balance to be determined
by Standard Bank.
Pursuant to the original mandate in February 2005, we issued to Standard Bank
1,000,000 common stock purchase warrants and paid certain upfront fees. Pursuant
to the Commitment letter, we paid Standard Bank additional upfront fees
consisting of cash and 1,000,000 shares of our common stock. In addition, on the
closing date we will be required to deliver to Standard Bank as an additional
upfront fee cash, an additional 1,000,000 shares of common stock and an
additional 12,600,000 common stock purchase warrants. We have will be required
to register the shares issued to Standard Bank and the shares issuable upon
exercise of the warrants.
Section 8 - Other Events
Item 8.01 Other Events.
At our Special Meeting of Stockholders on November 18, 2005, stockholders
approved the following:
Approval of a change in our state of incorporation from Nevada to Delaware.
For: 53,080,202 Against: 191,385 Abstain: 44,816 Broker nonvotes: 20,614,580
Approval of an amendment of our Certificate of Incorporation to increase the
authorized number of shares of common stock from 150,000,000 shares to
200,000,000 shares.
For: 71,479,919 Against: 1,692,105 Abstain: 758,999
Total shares voted: 73,931,023 out of 95,969,214 eligible to vote.
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Section 9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
The following Exhibit is filed as part of this report:
Exhibit No. Description
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99.1 Press Release dated November 15, 2005.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CAPITAL GOLD CORPORATION
November 18, 2005 By: /s/ Jeffrey W. Pritchard
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Jeffrey W. Pritchard , Vice President
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