This paragraph below is straight from Campbell’s 2006 Annual Report. It is clear as day that Nuinsco is the party that would be obtaining the loan (or financing). That means that the promissory, note, or debt, would be on Nuinsco’s books, not on Campbell's books.
What Campbell Management and the Campbell Board of Directors allowed to happen was they sold Nuinsco a block of debentures, with unusually low priced terms for “conversion to CCH shares”.
In other words, the 2007 debenture financing for Corner Bay was a “quid pro quo” transaction. Read the legal definition of “quid pro quo” here: http://en.wikipedia.org/wiki/Quid_pro_quo
Nuinsco did not take “obtain any loan”, or obtain any financing, or take any hit on their balance sheet for this transaction. The only Balance sheet impacted was Campbell’s… Campbell’s shareholder equity was diluted!! This is in clear violation of the 2006 agreement, as documented in Campbell’s own Annual report.
Nuinsco needs to pay up the $4 million now. And Campbell has $4 million in funds that they will be receiving (before we drop this issue).
2006 Agreements
The Company entered into a letter agreement dated April 18, 2006 (the “Nuinsco Letter Agreement”) with Nuinsco Resources Limited (“Nuinsco”) whereby Nuinsco agreed to (i) provide interim and ongoing consulting services respecting the operations of the Company’s mines, (ii) assist the Company in obtaining funding for the development of the Copper Rand Mine to a minimum of $5 million, (iii) subscribe for $2,5 million of units (the “Nuinsco Placement”) under the conditions of the Nuinsco Placement including (a) that the number of common shares in the share capital of Campbell comprising part of the Nuinsco Placement shall represent 10% of the number of outstanding common shares calculated on a fully diluted basis after giving effect to the Brokered Placement (as defined hereafter) and the Rights Offering (as defined hereafter) and (b) that the Company shall have completed the Brokered Placement (as defined hereafter) and the Rights Offering (as defined hereafter) and (iv) obtain a non-recourse project loan (the “Corner Bay Loan”) in an amount up to a maximum of $4,000,000 and/or other financing sufficient to develop and bring into commercial production a mine above the 250 metre level at the Company’s Corner Bay Property in accordance with a feasibility study to be prepared by Nuinsco at the Company’s cost, subject to the approval of the Company’s board of directors. Upon the execution of a definitive agreement with a lender respecting the Corner Bay Loan or prior to commencement of the development of the Corner Bay deposit, whichever occurs first, the Company agreed to transfer to Nuinsco, for no cost, an undivided 50% interest in all of the Corner Bay property, free and clear of all liens, encumbrances, royalties and other interests whatsoever (other than a 2% net smelter return royalty payable in respect of sales exceeding 750,000 tons of ore and the encumbrances created pursuant to the Corner Bay Loan.
