RE: For the layman......27 Jan 2024 19:19
Hi Andrew,
“ Why would you commit that amount of funds on machinery unless you know Bond financing was definitely going to happen and soon?”
Because these are long lead items and we have been told that they have got a good deal.
Time is a killer as that coupon on 80m will need paying bi-annually.
I keep saying it that it’s highly likely they will have to have one coupon’s interest payments in the bank at all times. If they agree a rate in the region of 8-12% which is the norm then that’s a lot of cash!
So you can’t then be sat idle waiting for trucks to arrive.
If the bond doesn’t come through its plan B anyway!
The talk about the bond investor(s) from the PXC camp is made to sound like it’s them that are delaying. It’s all lined up. Just sign!
But It might be that if they hand over 80m in cash for paper they still don’t have line of sight to the first couple of payments yet… so it’s still up to PXC to get stuff lined up.
Hence we will see the Riverfort rollover and consequently a larger debt likely to cover the coupon.
Any royalty revenues will then be used to pay the smaller Riverfort debt until such time as the whole operation becomes self funding.
I would be surprised if they can use any of the 80m to pay the coupon. As a bond investor that is pretty self defeating.
It’s my opinion PXC will need to do another placing later to bridge the gap between royalties and paying Riverfort.
I think investors should look at PXC from the perspective of the potential bond holders rather than the miners. That may help balance your optics.
And of course this is all my view. I could be way off.
They may even come up with an asset sale or another financing vehicle like a JV (which I would be in favour of).
Time will tell and I will very likely buy back in but I saw this placing coming and sold out just in time!
And that’s it, it’s about timing with these stocks and that usually comes down to luck.
There’s still lots of potential for good news and I will try and pick my reentry cognisant of running the risk of paying more or endless ‘NT’s’!!
Good luck guys,
Usual caveats
Trek
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