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 our

$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 at 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 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 full principal balance, 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 Second Amended and Restated Credit Agreement, dated and effective

February 9, 2016,

the Amended and Restated Credit Agreement, dated and effective

March 13, 2014,

and the Credit Agreement, dated and effective

July 30, 2013,

with our Lenders.

July 31, 2019,

long-term debt consisted of the following:

	July 31, 2019			July 31, 2018
Principal amount	$	20,000,000		$	20,000,000
Unamortized discount		(400,037	)		(465,026	)
Long-term debt, net of unamortized discount		19,599,963			19,534,974
Current portion		-			10,000,000
Long-term debt, net of current portion	$	19,599,963		$	9,534,974

During Fiscal

2018,

and pursuant to the terms of the Second Amended and Restated Credit Agreement, we issued

641,574

shares with a fair value of

$900,000,

representing

4.5%

of the

$20,000,000

principal balance outstanding at

January 31, 2018,

as payment of anniversary fees to the Lenders.

During Fiscal

2017,

and pursuant to the terms of the Second Amended and Restated Credit Agreement, we issued

738,503

shares with a fair value of

$1,100,000,

representing

5.5%

of the

$20,000,000

principal balance outstanding at

January 31, 2017,

as payment of anniversary fees to the Lenders.

In Fiscal

2019,

the amortization of debt discount totaled

$1,464,989

(Fiscal

2018:

$1,180,139;

and Fiscal

2017:

$1,156,657

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

The shares issued to the Lenders either as the

third

extension fees or the anniversary fee have been recorded as discounts on long-term debt, which are amortized using the respective effective interest rates at the time of issuance over the remaining contractual life of the long-term debt.

The aggregate yearly maturities of long-term debt based on principal amounts outstanding at

July 31, 2019

are as follows:

Fiscal 2020	$	-
Fiscal 2021		-
Fiscal 2022		20,000,000
Total	$	20,000,000