The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
If the margin isn't coming by way of discount to spot then it will be coming as interest on the debt. Two loans were detailed in the recent accounts; one at a rate of 33% over 6 months and one at 8% pa (but with warrants) I think. Surely the interest on these loans will sit somewhere between the two.
https://twitter.com/mccraerobbie/status/1602221551067316226?s=46&t=dfnzpE2weQ4hB6NsVnjZ5Q
Past deals from the first lender seemed to have a 6 month payback grace period, this second deal has a payback over those first 6 months. Clever use of production and very well done to get this second deal to fit in so neatly with the first.
No mention of further conditions on this second deal which is very good.
Borrow $3 million, at say 10% over the 6 months gives a payback of $3.3, slight discount and refining charges off spot price so maybe 340oz ish per month needed if gold price stays steady.
A bit disappointing not to hold onto gains but hopefully we will have news that the money is actually in the bank soon and that will move things back up.
I’m curious as to the funding conditions which are left to fulfil and wonder if any relate to sorting out the share register. If this is the case then we should get a prospectus very soon. But as the loan is to a subsidiary this might not be a condition.
I think we are around 40% of the parent price at the moment; right at the bottom of our range.
It’s an illiquid stock; one person selling crashes the price. Seems a good price right now to me but given the recent growth reduction we it could go a bit lower yet. No concerns long term though.
Mr McCrae in trademark bullish form and with every reason to be. Only short but well worth a listen.
He mentioned only 15% of production will be used to repay the loan. Repayment term and overall cost not yet revealed but this seems excellent news as it will allow further continued re-investment from gold sales and real safety in repayment cover if there are any production blips.