This is making much of nothing, the way I see it!

"We may pre-pay the principal without the holder’s consent, at a cash redemption premium of 140% until December 24, 2014; and at a cash redemption premium of 150% from December 24, 2014 to January 23, 2015. After January 23, 2015 and up to and upon the maturity date, the cash redemption premium is 150% of the principal amount subject to approval by the note holder."

"The Holder will be entitled to convert any unpaid principal plus accrued interest into our shares of common stock at a price per share of 45% discount to the average of the daily VWAP for the previous ten trading days before the date of conversion."

The only way this can sting shareholders is if the note holder converts his interest into shares and then immediately sells all or the bulk of those shares back into the market. That can't happen for a year, if it happens at all.

Meanwhile, LBSR may continue to find options for paying off this loan early, and on better terms, even if the payoff will cost 210 - 225 thousand dollars as compared to the 150 thousand dollars borrowed.

That said, I do not see this loan being converted. Well before the loan has come to term, the company should have had much good news driving the share price to multiples of the present value, in my opinion. That will mean much easier terms can be arranged for loans and/or other financial arrangements, and this obligation will have been paid early.

Not that it's really worth talking about, but I do find it interesting that LBSR can save 10 thousand dollars by paying off this note before December 24 of this year. I can't imagine what that is about. My first thoughts include 1) LBSR already has something lined up that may come to fruition before December 24, or 2) the lender may want some compensation for perhaps going into a different income tax situation after that date, or 3) the lender really wants his money back sooner than later and the 10k is a motivator, or ... (add your own guesses here).

Just thinking out loud again.

VP