6. DEBT

Financing Facility

On November 13, 2013, the Company, together with each of the Company's subsidiaries as guarantors, entered into the Loan Agreement with RCF, pursuant to which RCF provided a senior secured loan facility (the "Facility") to the Company under which the Company may draw up to $15.0 million. The Facility consists of three tranches of $5.0 million each. RCF advanced $3.0 million of the first $5.0 million tranche shortly following the closing of the Loan Agreement. The convertible debentures are secured and bear interest, calculated on the outstanding principal balance, at 12% per annum through January 29, 2014 and 10% per annum thereafter, payable quarterly. The principal amounts of the Facility are convertible into shares of the Company at a price of $2.60 per share at any time prior to the maturity date of December 31, 2016. RCF may convert the loan amount at the conversion price, which is $2.60 per share. The conversion rate is subject to customary anti-dilution adjustments and further downward adjustment, subject to a floor of $1.00 per share, in case of certain equity issuances by the Company before November 13, 2014.

In December 2012, the Company completed a $5 million short term financing provided by RCF. The terms of the financing include an annualized interest rate of 10% payable quarterly and a loan establishment fee of $160,000. The loan establishment fee was paid in December 2012 by the issuance of 42,884 shares of common stock of the Company. The number of shares paid was determined based upon the volume weighted average price of the Company's common stock for the 20 days ending November 29, 2012 ($3.73 per share). The maturity date for the financing was the earlier of (i) the date of the closing of the Shareholder Rights Offering and (ii) June 28, 2013.

In connection with the Rights Offering during March 2013, the Company repaid the RCF $5.0 million short term loan facility by issuing 1.96 million shares of the Company's common stock to RCF.

Summary of Long-Term Debt

	At December 31,

	2013			2012
Long-term debt of the Company consists of:
Resource Capital Funds—Convertible Debt Facility	$	3,000,000		$	—
Note Payable		—			5,000,000
Capital leases		15,038			129,722


		3,015,038			5,129,722
Less—current portion		(10,543	)		(5,112,140	)


Total long-term debt, including capital leases	$	3,004,495		$	17,582

Maturities of long-term debt and capital leases are as follows:

For the Twelve Months Ended:	Long-term Debt		Capital Leases

December 31, 2014	$	4,495	$	24,154
December 31, 2015		—		4,578
December 31, 2016		3,000,000		—
December 31, 2017		—		—
December 31, 2018 and beyond		—		—


Totals	$	3,004,495	$	28,732
Less amounts representing imputed interest				(18,156	)


Present value of future payments			$	10,576

Capital leases consist of trucks and equipment included in uranium properties.

Derivative Liability

The conversion feature of the convertible debentures meets the definition of a derivative liability instrument because the exercise price is not a fixed price as described above. Therefore, the conversion feature does not meet the "fixed-for-fixed" criteria outlined in ASC 815-40-15. As a result, the conversion feature of the notes is required to be recorded as a derivative liability recorded at fair value and marked-to-market each period with the changes in fair value each period being charged or credited to income or loss.

At the closing of the convertible debt loan on November 13, 2013, the fair value of the derivative liability related to the conversion feature was $2,061,794 and at December 31, 2013, was $2,169,408. The derivative liability was calculated using the Black-Scholes option pricing model with the following assumptions:


Risk-free interest rate		0.61% - 0.78%
Expected life of derivative liability		3.00 - 3.12 years
Expected volatility		94% - 97%
Dividend rate		0.00%

The changes in the derivative liability related to the conversion feature are as follows:

	December 31, 2013		Financial Statement Location

Balance, December 31, 2012	$	—
Fair value at inception		2,061,794
Change in fair value of derivative liability		107,614	Change in fair value of derivative liability


Balance, December 31, 2013	$	2,169,408	Derivative liability—convertible debenture

With the conversion feature initially being valued at $2,061,794, the resulting residual value allocated to the host debenture was $938,206, being the difference between the face value of the convertible debentures and the fair value of the conversion feature derivative liability.

The change in the convertible debentures is as follows:

	December 31, 2013

Balance, December 31, 2012	$	—
Discounted convertible debentures		938,206
Amortization of discount		86,509


Balance, December 31, 2013	$	1,024,715

In addition to the amortization of the discount on the convertible debenture, the Company incurred interest expense of $47,000 based on the 12% per annum stated interest rate.