RE:RE:Equity Raise IncomingTalked with IR last week. Basically, this is a stop-gap while they continue to look at financing options. This includes potential joint ventures, straight up equity financing, loans, etc. They couldn't say exactly who they were talking to, but I get the sense that a financial institution as opposed to a producer is the more likely of the two options for the next round of financing.
They have been working on financing since Q3 2015 and the way I read the conversation, the reason financing hasn't happened yet is because the company doesn't want to heavily dilute at these levels. So the conversations go something along the lines of the financier saying we value you at your NI 43-101 and current zine prices and the company saying confirmatory drilling everywhere has proven that the historical Polish State drilling is highly correlated, so our resource is actually much larger. Plus zinc prices are at extreme lows, but that the long-term outlook is the best of any base metal. I didn't get the sense that they would be unable to raise financing, but that they are trying to get better terms. Of course, IR would probably never suggest to an investor that they cannot get financing (until chapter 11 of course heh), so I wouldn't take that totally at face value.
Aside from the already committed studies and engineering to continue with permitting, there is no other activity (eg drilling). There will probably be slippage on permitting into 2017 rather than completing at the end of 2016. The director loan ensures they can pay concession fees and keep the lights on until something emerges.
I think it's the right play, as long as they're confident they can close financing of some kind later this year. Personally, I wouldn't expect a producer type to step until permitting is assurred (or done) so probably some type of financial institution stepping in. There is more than one European institutional investor already here (I am guessing that they are clearing through Instinet and ITG. There is also the UBS buyer from a year or two ago that is sitting on millions of shares) as well as Geologic Resource Partners (though I do not think they are acquiring open market).
Heatherdale is basically on hold (no surprise) so no help will come from 20 million shares RTH owns from that quarter.
Arcellormittal is in a world of hurt in terms of their balance sheet, so I wouldn't expect they are even thinking about any M&A right now. Teck on the other hand is in a much better financial position. Teck is consistently one of the most bullish zinc majors out there (for good reason, zinc has been the best part of their profit margins for several years now) and they don't have a signifcant European prescence. But the fact that Rathdowney optioned off most of its Irish portfolio to Teck suggests Teck wants a presence in Europe. At a superficial level, Teck could be a potential future JV partner or acquirer. But Arcellormittal still makes the most sense given their 33% stake in ZGH Boleslaw which owns the smelter next to Olza that is running out of feed. Plus Arcellormittal actually consumes zinc in its steel production operations. Too bad their finances are so screwed up right now.
Final word; the fact that directors are putting forward personal money to prevent dilution at these levels is a good sign. It shows that 1) they believe in the quality of this project and its ability to get permitted and 2) dilution is on their radar and they put some more skin in the game to prevent it. Granted, $300,000 on a 6-month 15% APR loan aren't exactly stellar terms (the CEO of a gold junior I own has given his company $3 million, interest free loans with no terms as a counter example), it's more than I have seen anyone at HDI do for any of the other HDI affiliated companies.