Baffinland Iron Mines Corporation
TSX VENTURE : BIM
TSX : BIM

Baffinland Iron Mines Corporation

August 17, 2007 08:55 ET

Baffinland Comments on Short-Term Investments Status

TORONTO, ONTARIO--(Marketwire - Aug. 17, 2007) –

Attention Business Editors:

Baffinland Iron Mines Corporation ("Baffinland" or the "Company")(TSX:BIM) advises on the impact of recent disruptions in global credit markets on $43.8 million of its $45.9 million in cash and investments. The remaining $2.1 million is held in cash and guaranteed investments not affected by this situation.

Baffinland's cash management criteria is to invest in products that are ranked by the Dominion Bond Rating Service ("DBRS") as R1-High. In July and August of 2007, Baffinland invested, on the basis of professional advice, a total of $43.8 million in the following A Notes with three separate trusts managed under the Coventree Capital Group Inc. ("Coventree"):



Maturity Nominal
Date Issuer Value Date Value

August 13,
2007 Structured Investment Trust III July 3, 2007 $9,949,500
August 13,
2007 Structured Investment Trust III July 10, 2007 9,957,500
August 15,
2007 Skeena Capital Trust Series A August 3, 2007 6,989,220
August 16,
2007 Lafayette Structured Credit Trust August 2, 2007 6,987,400
August 30,
2007 Skeena Capital Trust Series A July 30, 2007 9,960,700
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$43,844,320
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Coventree announced on August 13, 14 and 15, 2007 that it was experiencing market disruption and as a result was unable to meet its repayment obligations until its liquidity providers fund such repayments. While the DBRS announced yesterday that the investments are under review, the DBRS has rated the above trusts and their underlying assets as R1-High.

Of the A Notes held by Baffinland, $33.9 million came due and payable on the maturity dates shown above but were not paid and remain outstanding. Another A Note in the amount of approximately $9.9 million comes due on August 30, 2007.

Baffinland is currently investigating the implications of these events, which appears to be a result of the current lack of liquidity for asset backed securities of the type held by Coventree rather than the creditworthiness of its underlying assets.

The Company currently believes it has sufficient cash available to maintain financial obligations provided this market disruption is resolved in a timely manner. In the interim, the Company is working diligently on a short-term solution.

Baffinland is a Canadian publicly-traded junior mining company that is focused on its wholly-owned Mary River iron ore deposits located on Baffin Island, Nunavut Territory, Canada. Baffinland's shares trade on the Toronto Stock Exchange under the trading symbol BIM.

This press release contains certain information that may constitute forward-looking information within the meaning of securities laws. Forward-looking information is based on certain factors and assumptions regarding, among other things, expected mineral resources, iron ore prices and the feasibility of constructing and operating a direct-shipping iron ore mine at the Company's Mary River project. While the Company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward looking-information is subject to certain factors, including risks and uncertainties that could cause actual results to differ materially from what is currently expected. These factors include risks relating to exploration and development risks, risks relating to the worldwide price of, demand for and supply of iron ore, financing and liquidity risks and risks relating to the construction and operation of a mine at the Company's Mary River project. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While the Company may elect to, the Company is under no obligation and does not undertake to update this information at any particular time.

Contact Information

  • Baffinland Iron Mines Corporation
    Gordon A. McCreary,
    President and Chief Executive Officer
    (416) 814-3163

    Baffinland Iron Mines Corporation
    Robert J. Chausse, Vice
    President and Chief Financial Officer
    (416) 814-3170
    Website: www.baffinland.com
    Email: info@baffinland.com

    The Equicom Group
    Andreas Curkovic
    (416) 815-0700 ext. 262