via BNN.ca - Questions Of Debt - What Qualifies As Lending?

The overwhelming contributor to the demise of mining stock(and, of course, oil companies) has been debt. With the decline of interest rates, debt is seen as the panacea to earnings shortcomings within the mining space.

This is also the formula for the loss of purchasing power in the currency, where people are literally paid less for the same thing until they are compelled to borrow to make up the shortfall. Or their debt obligations now become so huge, that the bulk of their available money goes into debt service.

But you can also have forward obligations such as a swap arrangement, which is also technically borrowing. For example. If you have Sprott that raises a billion in cash with their IPO of an ETF, they will have to purchase a billion's worth in gold from somewhere.

If, however they make swap, which is essentially an arrangement based on the balance sheet of one company against another, they can list gold bars at the Mint without them act sully being there, only that they have yet to be mined.

The forward liability might take five years to complete, but the balance sheet at the ETF attests to those bars as already being under management.

But GBN.V has no debt and has no capital requirement. Everything from a mining perspective has been carried off swimmingly, nobody is the wiser. They could be producing as much ss 250K oz., and you wouldn't know it. The entire body of reporting over the last five years is of no substance, however, and the secret is safe and sound.

The secret is that the mine supply is essential to the ETF, because the gold just does not magically appear in an account.(but people will be inclined to believe that gold magically appears in the futures market, or in an account, as long as somebody attests to their existence.)

Conclusion: My guess is that GBN.V will have filled out their requirement to provide the Sprott ETF with gold, and that all the bars refined at the mint are out of the La Ronge Gold Project. You can see how much this arrangement is a complete departure from the debts taken on by mining companies or the cornering of commodities markets.

http://www.bnn.ca/Video/player.aspx?vid=716854

-F6