Metanor Resources MEAOD

Method in their Madness

[JRaffles]

With detailed access to cash flow requirements, it is not possible to say whether these funds will be used wisely.  However …..

 

• The company may be under pressure to pay $3m + …… in respect of the accident settlement claims, which are a legacy which must be settled.  When this has been done, there should be an uncertainty removed from the point of view of new investors.
• The working capital cost to move the project from a completed mine and into cash in the bank from gold sales, has to be taken into account.  With say, 2-3 months outgoings [at higher initial cash costs] before gold revenues flow, funding may be significant.

 

The 12% financing & 2.6m shares could be viewed in a favourable light when the following is considered……..

• There is no long term commitment indicated – the loan could be repaid early in 2013 when cash rolls in from production.  A lender will require a premium rate for potential DD and set up costs, if the board only required a short to medium term loan.  If the loan were to be repaid after 12 months, then 12% intered = 509 ounces of gold at $1650….. not too high a price for shareholder to pay, which is ~ 1% of Metanors gold production for one year.
• $7m raised in shares at this time would require a PP of 23m shares at 0.30. 
• Since it seem that the company is seeking bridging finance for working capital before production kicks in, then a loan, albeit at a premium may be the option that all shareholders would agree to, if they weighed up the alternatives.

 

 

Don’t all rush to buy RP a drink …..