Getty Copper Inc. Enters into Loan Agreement: A Strategic Move for Growth

Getty Copper Inc. (TSXV: GTC) recently announced a significant strategic move by entering into a Loan Agreement with Freeway Properties Inc. (Freeway). This agreement, subject to approval from the TSX Venture Exchange, secures advances made by Freeway since April 2017, totaling $1,176,500, and interest to date of $316,029.55. The total indebtedness at December 11, 2024, amounts to $1,492,529.55. The loan will bear interest at 6% per annum and is due on January 31, 2026. In the event that John Lepinski and/or his affiliates cease to be controlling shareholders of the Company, the loan will become immediately due and payable.

The loan is secured by a charge on the Company's real estate assets, including its building located in Logan Lake, BC, and its crown granted mineral claims. The security interest is subordinated to the security interest of Robak Industries Ltd. (Robak) under a debenture dated November 2016. The Robak Debenture was issued to secure a loan of $900,000 from Robak, with the proceeds used to reimburse John Lepinski for litigation legal costs, repay advances made to the Company by Freeway, pay management fees to Freeway, pay past rent due, cover expenses relevant to John Lepinski, and retain working capital.

Both Freeway and Robak have agreed, subject to TSXV approval, to convert $250,000 of the interest payable in respect of the debts outstanding into common shares of the Company at $0.05 per share. This conversion will result in the issuance of 5,000,000 common shares to Freeway and 5,000,000 common shares to Robak, totaling 10,000,000 common shares.

The impact of this loan agreement on Getty Copper Inc.'s cash flow and profitability is significant. The 6% interest rate is relatively low, reducing the financial burden on the company. However, the total debt service (interest + principal) will strain cash flow, potentially affecting profitability. To mitigate this, Getty Copper Inc. plans to convert $500,000 of interest into common shares at $0.05 per share, reducing the immediate cash outflow.

The loan conversion will also impact the company's shareholder structure and dilution. Existing shareholders will be diluted by approximately 12.5% due to the issuance of 10,000,000 common shares to Freeway and Robak. Post-conversion, Freeway and Robak, controlled by John Lepinski, will own 43% of the company, potentially influencing its governance and strategic decisions.

The conversion of debt into shares will also affect Getty Copper Inc.'s debt-to-equity ratio and overall financial health. The reduction of $500,000 in debt will improve the debt-to-equity ratio, assuming the company's current equity is $1,000,000. The debt-to-equity ratio would decrease from 1.49 to 1.24, enhancing the company's financial health by reducing its debt burden and increasing its equity base.

In conclusion, Getty Copper Inc.'s entry into the Loan Agreement with Freeway Properties Inc. is a strategic move that aims to improve the company's cash flow, reduce debt, and enhance its financial health. While the loan conversion will result in shareholder dilution, it is a more favorable option than issuing new equity at the current market price, which would dilute shareholders by around 25%. Investors should monitor the company's financial health and potential future dilution to make informed decisions about their investments.