There's been some discussion about what is this bridge loan is for...and why not use the proceeds to pay off accouts payable etc. and why the heck was the money needed.
Think about the environmental permitting ..everyone.
My suspicion is that the loan is for Environmental Bonding Facility. This money is a guarantee of funds to correct or compensate environmental damage in the future.
Take a look at this news release with Baffinland and RCF. RCF did a similar bridge loan for this purpose. Notice in the link below that RCF can convert the principle owed to baffinland shares for .46 cents. In the case of Noront the same applies but for .45cents.
http://www.reuters.com/article/2009/07/31/idUS235939+31-Jul-2009+MW20090731
TORONTO, ONTARIO, Jul 31 (MARKET WIRE) --
Baffinland Iron Mines Corporation ("Baffinland" or the "Company") (TSX:
BIM) is pleased to announce that it has signed a commitment letter
regarding the establishment of an environmental bonding secured bridge
loan that may earn conversion rights (the "Facility") with Resource
Capital Fund IV L.P. ("RCF") in the amount of US$13 million (the
"Facility Amount").
The Facility, which matures on December 31, 2012 (the "Maturity Date"),
will be used by the Company to cash back current and future environmental
bonding requirements under the Company's licences, permits and leases for
its Mary River Project on Baffin Island, Nunavut. Upon anticipated
closing of August 27, 2009, the Company intends to draw the equivalent of
C$10.3 million to cover an increase in financial security under its
surface rights land lease to C$16.5 million resulting from a significant
amount of activity that took place at the Mary River Property during 2008
which included the bulk sample program.
The Company may draw under the Facility until August 16, 2010 (the
"Availability Period"). Amounts outstanding under the Facility at the end
of the Availability Period (the "Conversion Amount") automatically become
convertible and may then be converted, at RCF's election, into common
shares of the Company ("Common Shares") any time after the end of the
Availability Period and prior to the Maturity Date at a conversion price
of C$0.46.
