Ann: Completion of $30 Million Oversubscribed Placement, page-111

it doesn't really matter what security is provided to AF whilst he is the only lender to POS i.e. he has priority given there is no one else. If the AF loan is still in force when the bank provides its debt then as a CP to debt financing AF's loan will be subordinated to the bank's loan via a priority deed. But it might be a moot point. Part of the funds of the $30M CR will be used to retire AF's debt so by the time the bank provides its funding it will probably be the sole lender to POS. Therefore any security provided to AF will be either extinguished (once his loan is repaid) or demoted in priority (once the Bank provides POS with money)

The security issue is just normal lending practice for a junior miner. i.e. the bank won't accept non-recourse lending because POS's cashflow isn't there yet. In future, once our cashflow is strong, the Banks will feel a lot more comfortable to lend just on our future cashflow potential (such as BHP, RIO, FMG).

But let me just say this. No Bank EVER lends to an entity (or an individual) unless they are satisfied with the company's value AND its ability to generate cashflow to pay interest and repay loan. The fact that POS is close to finalising a debt deal is the most positive thing that I read this week because its the first real sense of confidence for POS from a risk averse capital partner (i.e. a bank)