Hi Bill, Please accept that it is not my intention to be...

Hi Bill,

Please accept that it is not my intention to be condescending when I point out that a simple definition of "Contingent" is "Depending on something else that might or might not happen"

If the streaming deal was contingent on production then technically the debt would arise only if there was production. That is not the case here as the debt is actually on the books and noted as Deferred Revenue which is the component that must be repaid and is also sometimes referred to as the up-front deposit

The rate at which the deferred revenue is reduced is calculated by using the margin between the price that Quintana pay for the metal acquired from KBL and the Market price. The current Margin is quite high so that's good.

If the deferred revenue is not repaid to Quintana by the time KBL cease mining Mineral Hill, then Quintana get to exercise their security and take whatever they can. This makes it an actual liability and not a contingent.

After Quintana have been repaid the amount that is carried in the books of KBL then Quintana continue to be entitled to buy ~12% of all metal produced at a price. This part of the streaming deal would be a contingent liability and there is no allowance for it on the books because it is wholly dependent on production.

I have extracted a couple of paragraphs from a pertinent article on Streaming and included a link below to the full article:

Extract
Streaming arrangements may provide for a buy-back option which provides the resource company with some protection in the event that there is a shortfall in production. A typical buy-back option would permit the resource company to buy-back a percentage of the production promised to the streaming company for a fixed price, usually in the form of a refund of a portion of the upfront payment, if the project does not achieve a target level of production. This option is usually only exercisable once and in very specific circumstances.

Some streaming arrangements also contemplate “top-up” deliveries in the event that anticipated future expansion is delayed. Where the resource company is required to deliver a fixed percentage of production to the streaming company, top-up deliveries are intended to compensate the streaming company in circumstances where expanded future production is promised but delayed. Top-up provisions provide for an adjustment mechanism to “top-up” or increase the amount of metals deliverable in the event that the resource company does not achieve a targeted level of production on or before a specified date.

Here is a link that discusses streaming in more detail
http://www.canadianmininglaw.com/2013/02/25/stream-financing-a-primer/

Last of all, I would like to say that I did in fact err regarding your comment on the MRI trading AG debt. What you said on 8/8/2016 was

"I believe MRI trading has an off-take agreement with KBL"

On the assumption you are correct and I am not doubting you, how is this debt going to be satisfied? If KBL have received the money for the product but don't have the cash as an asset, does it mean that $8-9m of future product is to be delivered to MRI without any new money coming in to KBL for the product? Or is this the debt that they were referring to in their announcement of June 14, 2016 and had to raise $6m for in a hurry?

The MRI relationship part is a little opaque to me at present, so apologies in advance if I have missed something but if anyone can shed light on the MRI debt it would be appreciated.