Debt

6 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Debt

5. DEBT

On November 13, 2013, the Company entered into a loan agreement (the “RCF Loan”) with Resource Capital Fund V L.P. (“RCF”), whereby RCF agreed, subject to the terms and conditions set forth in the RCF Loan, to provide a secured convertible loan facility of up to $15,000,000 to the Company, which was subsequently amended on April 29, 2014 to reduce the amount available thereunder from $15,000,000 to $8,000,000, which has been fully drawn.

Amounts drawn under the RCF Loan mature on December 31, 2016 and bear interest at 10% per annum, payable quarterly in arrears in shares of the Company’s common stock or, at RCF’s election, in cash. The number of shares to be issued as payment for interest is determined based upon the VWAP of the Company’s common stock for the 20 trading days preceding the last day of each quarter. Accordingly, the Company issued 102,912 shares of common stock on January 5, 2015 for settlement of interest expense of $198,620 related to the three-month period ended December 31, 2014 and 136,463 shares of common stock on April 1, 2015 for settlement of interest expense of $181,496 related to the three-month period ended March 31, 2015.

As of June 30, 2015, interest expense of $200,000 relating to the three-month period ended June 30, 2015 was included in accrued liabilities on the Company’s Consolidated Balance Sheets. The Company subsequently issued 169,909 shares of common stock on July 2, 2015 for settlement of this interest expense.

The following table represents the key components of the RCF Loan:

	June 30,	December 31,
	2015	2014
	(thousands of dollars)
Debt principal	$         8,000	$         8,000
Unamortized discount	(2,756)	(3,655)
Carrying value of convertible loan, end of period	$         5,244	$         4,345

For the three- and six-month periods ended June 30, 2015, the Company recorded amortization of the debt discount of $449,978 and $898,561, respectively, which has been included in interest expense in the Company’s Condensed Consolidated Statements of Operations.

RCF may convert amounts drawn under the RCF Loan into shares of the Company’s common stock at any time prior to maturity on December 31, 2016. The conversion price is set at $2.60 per share. As of August 14, 2015, RCF owned 7,229,152 shares or 24.1% of the Company’s outstanding common stock. If RCF were to convert the entire $8,000,000 outstanding under the RCF Loan, RCF would receive 3,076,923 shares of the Company’s common stock, and RCF’s ownership percentage in the Company would increase to 31.1%.