North Bay Resources Inc (NBRI)

[MinookaDan]

The way I read this interview, that is Perry's plan. It sounds like all of the mines he plans to get running again are going to be EB-5 funded. It also sounds like he will be creating a new company to qualify for funding and also run each mine.

Here is the link to the whole interview:
http://www.northbayresources.com/GermanInterview-052811.pdf

Here is the pertinent information (PL=Perry):

JK: Well, once in operation this mine should give North Bay and the foreign investors a healthy profit.
But first you have to buy the mine. How does that work? North Bay is still a small company.

PL: We currently have two primary sources of funding. We have a $5 million equity credit line with
Tangiers Investors, which we are drawing upon now to make our Ruby mortgage payments, and
which alone can accommodate the entire cost of the acquisition. The second source of capital, which
is what we will be using to fund the start of mining operations, is a US government program called
EB-5. EB-5 is intended to stimulate the US economy by creating new jobs in areas of high
unemployment. To do this, the US government makes up to 10,000 visas available each year to
foreign nationals who want to immigrate to the United States by agreeing to invest a minimum of
$500,000 each in a US business that will create new jobs. The Ruby fits perfectly in this program, as
unemployment in this area of California is quite high, and we expect to receive up to $7.5 million in
this way.

JK: Sounds “innovative” to me. You had to convince Tangiers investors to put money into North Bay.
They would not have given you convertible debentures for the option payments if they would not
have done their own due diligence, right? Not to forget that the replacement value of the mine is
higher than your purchasing price!

PL: Yes, Tangiers has been quite supportive. They recognized instantly that we had negotiated a
great deal in which we are acquiring an asset that would immediately become accretive to our
balance sheet. The Ruby has $3.5 million in infrastructure in place, including buildings, an operating
mill, 6,000 feet of tracked haulage underground, and all the support equipment necessary to begin
mining. We believe the replacement value of the infrastructure is now several times higher than the
appraised liquidation value. Considering that the entire acquisition is costing us $2.5 million, we look
at the transaction as the purchase of the equipment at a discount, and we are getting all of the gold
in the ground for free.

JK: But that’s not all that is unusual for European investors. You want to start the Ruby mine with
money from foreign investors who want to become US Citizens. How does this work and what part of
the profits would they get?

PL: Essentially, we have formed a series of joint-ventures, each of which will receive a portion of
equity in the project. First, we have a JV with ACG Consulting, which is an expert in EB-5 financing,
and has offices throughout the world to bring in the foreign investors. For this JV, we have formed
an entity called Ruby Gold, LLC, and which will be the actual owner/operator of the Ruby Mine once
the EB-5 funds have been received. Second, we have a joint-venture with the Northern California
Regional Center (“NCRC”), which is the designated EB-5 Regional Center under which the Ruby Mine
will be assigned. Third, NCRC and ACG have formed an entity called Ruby Gold Foreign Investors, LP,
which is structured as a limited partnership, and which is the legal vehicle into which the foreign
investors invest their money. The LP then loans the funds to Ruby Gold LLC to create the jobs at the
Ruby Mine and begin operations, and NCRC monitors the project to make sure we create the
required number of jobs and pay back the investors from mining revenue within 5 years. It is all
rather complicated, but at the end of the day, North Bay will be the majority owner, with no less than
58.65% equity, and all of the other participants combined, including ACG, NCRC, Tangiers, and the
foreign investors’ partnership, will be apportioned a certain amount of project equity, that is to say, a
share of the net profits, from the remaining 40%.

JK: So the government can stimulate the economy without using own money. Interesting. And North
Bay would end up with 58.65 % of the profits after loan repayment of the Ruby mine but you don’t
have a further dilution of stock with that kind of financing.

PL: Exactly. And you raise a good point in noting that the funding is non-dilutive. That is the key
aspect of this type of funding vehicle for us. We are not financing it on the backs of our
shareholders, which leaves the company in a strong position to enter into any number of similar
deals without diluting our shares.

JK: This might be a model to be applied for more mines than just the Ruby. I can imagine that many
historic mines become at the current gold price economic again.

PL: Yes, precisely. Our plan is to acquire additional projects using the same formula, though
depending on the nature of the transaction, they may each have a different structure. If, for
example, we can acquire 5 mines in this way, each one capable of producing a minimum of 2,000
ounces of gold per month within the first 2 years, in a short period of time we will be producing a
minimum of 120,000 ounces of gold per year. Each project, through a separate joint-venture LLC,
will have its own infrastructure and team in place that focuses on that specific project and that
project only, leaving us, the parent company, with the resources and capability to continue acquiring
new projects, building reserves, and increasing shareholder value.