Infinito wades through legal battle in Costa Rica

It pays to have investors that believe in your cause.

Infinito Gold (IG-V) announced that its bondholders have again agreed to waive default rights on their notes in connection with the company being unable to make interest payments.

If only all company’s had such understanding holders of debt.

But in the case of Infinito, the note holders are also the largest investors in the company and clearly have its long term success foremost in their mind.

Towards that end, they have granted the company another month long extension – the fourth consecutive extension – so as to give Infinito a chance to get its Crucitas mine up and running.

The would-be mine was put on the bricks last year just before shovels were set to begin digging the open pit which would tap a deposit with an indicated resource of 1.2 million oz. of gold from rock with an average grade of 1.32 grams gold.

A quirk in the Costa Rican legal system allows any complaint to be brought before the Supreme Court, so when a local activist that had long been a thorn in the side of Infinito, demanded that his claim against the company be taken before the country’s highest court, it had to be heard.

Since that time the company has anxiously awaited a verdict to be passed.

The first ruling has to do with the plaintiff’s complaint that the president of the country had no right to grant Infinito a mining permit in the first place. If the court rules that the president was within his rights, than Infinito is likely to win a second ruling that would pave the way for it to start construction, with no further interruptions.

Infinito has $50.5 million in secured convertible notes that are held by its largest investors Exploram Enterprises and Auro Investments. Combined and on a fully diluted basis, the two companies hold roughly 90% of Infinito’s shares.

Exploram, which is Infinito’s largest shareholder, is controlled by Calgary-based billionaire Ron Mannix, who has been a long time investor in the project, and Auro is a company associated with Steven Dean, Infinito’s Chairman.

Infinito is only able to drawdown from its project debt financing – which it will use to make interest payments on its notes — once it is allowed to re-commence construction at Crucitas.

In Toronto on Oct. 1, Infinito shares fell 18% or 3.5¢ on 151,000 shares traded.