RE: RE: RE: RE: Approaching the 11th Hour The PP had been long expected since AME has had almost no cash since June 30 of last year ($220K). The company had mostly been paying its bills through the JV company, but I'm still surprised that the PP was not done sooner given the lack of corporate funds in the bank. With the BFS now complete, AME's quarterly costs may go up in order to retain key employees unless KGHM takes full control of the project. I'm thankful that AME waited until now to do the PP @ 0.22 rather than at 0.15 which is a stock dilution savings of 6.5M shares and better priced warrants. The $30-35M would be taken off the top of AME's capex portion ($795M x 20% - 35M = 124M to be funded) and not deposited into the bank which I too thought before. Perhaps we will see that insiders participated in the deal some weeks from now.
It's possible KGHM did make a buyout offer, but we cannot know for sure what other proposals went on in the back room. My guess as to why KGHM structured the deal the way it did was to get a cheap option on a past producing mine with very good project economics, but not yet confirmed by a BFS. Two years ago, 50kt of copper output represented ~13% increase to KGHM's production. After the acquisiton of QUX, the output reduces to a 8-10% incremental gain if you ignore the gold.
As TELEMARKER pointed out, all capital cost projects for miners have gone up. However, metal prices have gone up just as well and actually provide greater leverage when adjusted for NPV sensitivity. Keep an eye on what's going on with KGHM's bid to find loan financing of $1.6B because it could relate to a go decision for Ajax. Then again, the funds could be going towards another leveraged buyout or to further fund Quadra's projects such as Sierra Gorda (55% ownership and already fully funded) which is less likely. In the latest presentation, QUX's projects are self-financed. One thing is clear though, KGHM is transitioning from a mature and domestic copper company to a growing and internationally diversified metal company. I think AME is relevant enough to fit into KGHM's new direction.
https://www.kghm.pl/kanada/KGHM_Investor_Presentation_ENG.pdf