RE: Closure to a day of excellent news24 Sep 2023 11:53
"Not only does the US$5 million grant cover a significant portion of the DFS costs, which materially reduces the dilutionary impact to Blencowe of funding the full DFS itself, but it also provides a highly motivated full mine implementation funding partner ahead."
My understanding of the situation is thus:
1) The TAG covers a significant portion of the DFS costs, not the whole lot.
2) The TAG has "reduced" the dilutionary impact of Bres having to find the remaining costs, not eliminated it!*
3) Bres and the DFC will be CO FUNDING (i.e. jointly funding) the remaining work under the DFS.
4) The agreement is that the DFC will provide the money in tranches linked to milestones. The milestones are likely to be tied to the DFS.
5) Achieving these milestones is obviously going to incur costs. The DFC will be jointly funding these costs, but the total amount is going to be more than $5 million.
6) If a particular tranche of DFC funds isn't enough to pay for all of the work needed under a particular milestone (and before the next tranche of funds can be drawn for the next milestone), Bres will need to find the shortfall. This isn't match funding as such, in the sense that each party puts an equal amount in at all stages, but co-funding.
7) With Bres's existing funds and the $1 million upfront from the TAG, the next milestone under the agreement is paid for. This will unlock the next tranche, but of course we don't know if that next tranche will cover all of the costs of the subsequent milestone, or Bres will need to co-fund it as well.
*Whether and what dilution remains for this DFS stage, all depends on share price movement, warrant monies and any monies Bres generates from third parties through things like offtake agreements. NB: we also have institutional backers here, and I would imagine they might want to increase their stake, before other BIG players arrive.
But as I and others have said, this is such a minor issue, bordering on an irrelevance, when you consider the overall fundamentals that have now opened up. The current NPV is a staggering $482 million, but even this is going to get a significant increase from the current DFS. Overall - with or without dilution, this should be a screaming buy at these levels. All imo and dyor
PS: I'm slightly uncomfortable with the idea that the US now has first refusal on the project, but its China that is testing the product and potential offtake. Will this present any difficulties?
Sign In
Follow the stocks
