Baru Gold Announces Shares for Debt Transaction
Baru settles a $713,000 debt by issuing 14.3 million shares at $0.05 per share to address its cash crunch.
Baru Gold Corp. has approved the settlement of $713,258.55 CAD in debt through the issuance of 14,265,171 common shares to arms' length lender Mercer Street Global Opportunity Fund LLC. The settlement is executed at a deemed price of $0.05 per share, directly referencing the convertible loan agreement originally dated July 15, 2022, and amended on July 10, 2026.
This transaction follows the July 16, 2026 forbearance agreement, which delayed repayment until July 17, 2027, and included the issuance of 6,528,879 non-transferable bonus warrants to Mercer. The loan was rendered unsecured against the Sangihe Gold Project equity, and the interest rate was reduced from 18.0% to 16.67% per annum. The share issuance remains subject to TSX Venture Exchange approval, with all securities subject to a standard four-month hold period.
Baru Gold Corp. (BARU) completed a debt settlement on July 16, a move that aligns with management’s strategy of converting matured debt into equity to preserve scarce cash. The transaction is dilutive, adding 14.26 million shares to the approximately 379.4 million share count, representing a 3.76% increase in outstanding shares.
While the deal reduces the outstanding loan balance by approximately $713,000, the remaining loan balance is negligible at approximately $103,000, meaning the liquidity relief is marginal. The company’s cash position remains critically depleted at $42,194 CAD against $7.95 million in current liabilities, confirming that this equity issuance is a survival mechanism rather than a strategic growth catalyst. The market impact is expected to be neutral to slightly negative due to the dilutive nature of the issuance and the underlying reality that the company cannot service debt in cash.
Baru Gold Corp. is a Canadian junior mining company focused on the Sangihe Gold Project on Sangihe Island, North Sulawesi, Indonesia. The company holds a 70% interest in the project through its subsidiary PT Tambang Mas Sangihe (TMS), with the remaining 30% held by Indonesian partners. The project covers approximately 25,000 hectares, with a 65-hectare zone targeted for initial production. Only approximately 10% of the gold-bearing area has been explored to date.
NI 43-101 resource estimates indicate more than 200,000 ounces of gold, comprising 114,000 ounces indicated and 91,000 ounces inferred, and more than 3,000,000 ounces of silver within the initial production area. Management’s stated strategy is to proceed directly to production without establishing mineral reserves or completing a NI 43-101 feasibility study, explicitly acknowledging increased technological and economic risks. The company has secured an environmental permit and is awaiting final regulatory approval to upgrade the license to a Production Operations License.