RE:7th Turd CFO - and then we shut down for winter as plannedWell, Ogo...painful topic again...Most interesting part of FS YE2020 is "financial costs"...almost 11.4 times higher than YE2019...What's in that? $1,846,000 only in 2019 but in 2020 jumped to $21,106,000...Change in fair value of derivative liability 2019-873k, 2020-17,953k
How MNP auditors measuring "materiality"? ...Just a few notes in MD&A & Audited FS, ...we use "FVTPL" method for Convertible debentures & Restricted cash...Below my thoughts:
1. Miscalculations of Fair value? Wrong benchmarking by comparing Mongolia & Canada rates? Mongolia Government International Bond yield 10.875% as of Apr'21...
2. MNIF 12% maybe abnormal high for Canada, but seems in Mongolia normal. Means, STGO paying much higher than risk free rate, that's why "entity's own credit risk" such as $21,106,000
3. No comment or notes for "Restricted Cash"..What's that?
4. Is FVTPL inconvenient? Or they have to re-calculate fair value instrument-by-instrument basis?
Note:
"...On January 30, 2020, the Company received funding from the Mongolian National Investment Fund (MNIF) PIF SPV (the “Fund”). The Fund has subscribed for a 12% twoyear secured convertible debenture of the Company in the principal amount of $3 million..." Then they wrote: "...As at December 31, 2020, the fair value of convertible debentures - derivative component was estimated based on the Black Scholes pricing model using a risk free interest rate of 0.20% based on 2-year Canadian Government bond yields"