NOTE

LONG-TERM DEBT

December 5, 2018,

we entered into the Third Amended and Restated Credit Agreement with each of Sprott Resource Lending Partnership, as agent, and our remaining lenders and participants (collectively, the “Lenders”), whereby we and the Lenders agreed to certain further amendments to the

$20,000,000

Credit Facility.

The key terms of the Third Amended and Restated Credit Agreement are summarized as follows:

●

extension of the maturity date from

January 1, 2020

January 31, 2022

;

●

deferral of the prior monthly principal payments until the new maturity date of

January 31, 2022;

●

issuance of

third

extension fee shares equal to

of the principal balance outstanding or

$1,400,000

paid to the Lenders by way of the issuance of

1,180,328

shares of the Company; and

●

payment of anniversary fees to the Lenders on each of

November 30, 2019,

2020

and

2021,

7%,

6.5%

and

6%,

respectively, of the principal balance then outstanding, if any, payable at the option of the Company in cash or shares of the Company with a price per share calculated as a

10%

discount to the

five

trading-day volume-weighted average price of the Company’s shares immediately prior to the applicable date.

Under the terms of the Third Amended and Restated Credit Agreement, the Credit Facility remains non-revolving with an amended term of

8.5

years maturing on

January 31, 2022,

subject to an interest a rate of

per annum, compounded and payable on a monthly basis. An underlying effective interest rate of

16.67%

has been calculated under the assumption that the Company will carry the full principal balance of

$20,000,000

to its contractual maturity on

January 31, 2022

without exercising the prepayment feature; and therefore, the anniversary fee payments of

$1,400,000,

$1,300,000

and

$1,200,000,

which are calculated on the principal balance then outstanding and can be made in shares or cash at the Company’s discretion, will become due on each of

November 30, 2019,

2020

and

2021,

respectively.

The Third Amended and Restated Credit Agreement supersedes, in their entirety, the prior Second Amended and Restated Credit Agreement dated and effective

February 9, 2016,

the prior Amended and Restated Credit Agreement dated and effective

March 13, 2014

and the prior Credit Agreement dated and effective

July 30, 2013.

As at

January 31, 2019,

our long-term debt consisted of the following:

	January 31, 2019			July 31, 2018
Principal amount	$	20,000,000		$	20,000,000
Unamortized discount		(1,198,906	)		(465,026	)
Long-term debt, net of unamortized discount		18,801,094			19,534,974
Current portion		-			10,000,000
Long-term debt, net of current portion	$	18,801,094		$	9,534,974

For the

three

and

six

months ended

January 31, 2019,

the amortization of debt discount totaled

$358,349

and

$666,120

(

three

and

six

months ended

January 31, 2018:

$308,409

and

$605,831

), respectively, which was recorded as interest expense and included in our condensed consolidated statements of operations and comprehensive loss.