Questions re: Latest MD&A
I went through the recent MD&A and have a few questions. Maybe, some of you guys might want to comment on these:
1). I did not find any mention of the "Options" program that they entered in 2013 which was to hedge in case Gold went below 1150/oz. They talk about a couple of legacy programs under the Financial Instruments discussion, but no mention of the options bought in 2013.
2). Re: The Debt Facility, I looked at the covenants and it does mention that net debt shall not exceed 3.25 times the EBITDA, At 300 million net debt level currently, that means EBITDA needs to be approx $ 93 million. (300/3.25). It was not an issue when Gold Price was above 1250 and AISC averaging 1000 and annual production of 450,000 oz. However, with current Gold Price at 1150 and AISC at 1000, EBITDA at 450,000 oz equates to 67.5 million, which will fall way short of the required 93 million. As per the debt covenant, what will happen in a situation like this. IMO, EDV might be forced to hedge, by the lenders, as the covenant comes into play or is there anything more draconian they can do, like, calling the loan and liquidating the company which means , equity shareholders get wiped out.
Comments please, Marben ??