via BusinessDictionary.com - In-Substance Debt Defeaseance

How Golden Band was able to keep the production of 40 tonnes of gold off the balance sheet which it provided to Sprott, which I have referred to as the 'Asset-Baseed Financing' and complete a second tranche of revenue-based financing totalling $440m. from ores in the La Ronge Gold Belt is called an in-substance debt defeasance. The asset-based tranche was kept entirely off-balance sheet.

The only difference with the definition usually associated with defeasance is that instead of treasuries used as a way to pay obligations, the asset used was doré produced from the EP and Roy Lloyd mines.

"A loanprovision that removes it from the balance sheet of cash is set to the side for debt service. Defeasance typically happens when a borrower owns a portfolio of Treasury securities where coupons are used to service a debt. If the borrower set aside enough assets to cover the debt obligation, the debt will not need to be listed on a balance sheet."

http://www.businessdictionary.com/definition/in-substance-debt-defeasance.html

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