Baffinland project eligible for untied loan guarantees

In an announcement Thursday afternoon, Baffinland Iron Mines Corporation (TSX: T.BIM, Stock Forum) said that it has been advised by KfW IPEX-Bank that its Mary River Iron Ore Project in Nunavut is eligible in principle for untied loan guarantees from the Federal Republic of Germany.

Baffinland notes that the German government supports projects which are of outstanding importance for the country, including particular projects securing German imports of raw materials.

“KfW IPEX-Bank requested the German Government, through PwC, to confirm eligibility in principle for untied loan guarantee in the amount of US$1.2 billion, for cover of commercial and political risks,” says the company.

At this stage, this amount of loan coverage is indicative only, says the company.

A formal application for an untied loan guarantee will be required as soon as all relevant information on the structure of the project is available.

"In recognizing the importance of our project for the Federal Republic of Germany, we have further validation of the uniqueness of the Mary River deposits. We at Baffinland have long believed that our Mary River deposits are outstanding high quality iron ore deposits that will be developed, a view now shared by many informed people. To achieve our development objective, we will ultimately require coordinated participation of a large global banking syndicate. Key next steps for Baffinland include strategic partnering of the project and this confirmation of the importance of our project to the Federal Republic of Germany should assist our efforts in this regard," said Gordon McCreary, president and CEO of Baffinland Iron Mines.

Shares of the company were up 41% to 34 cents Friday morning.

On the company’s Bullboard, musing said: “If they get this financing, will be a very signficant beginning. In part because they not only get financing but a major bankd and a customer or set of customers want to participate. The release does indicate that BIM has something of major importance on their hands and that sophisticated purchasers and countries, advised by experts, are interested in the deposit[sic]”