Capex and fundingWhat I don't understand when looking at some of the comments and also broker research reports is why funding of the seemingly smallest construction budgets among the graphite companies is an issue.
This obviously is under the assumption that the feasibility study will be positive. Talking to the company there is no indication that there will be any issue. We should shortly get news about the pilot program and then the feasibility study in Q2. The pilot program is according to the company nothing special as the mined graphite is not exactly a new product and no mining company has issues with the mined product they cannot solve. Having said that, the company indicated that there might be an extension of the pilot program as they initially took a larger sample then they used, they want to do more testing and some tool broke during the testing. But timing of feasibility study is still on track.
The key for me is that not only do they have Fidelity on board with over 10%, a private investor from the Middle East with a similar amount, but more importantly the government funds in Quebec. Again, unless there is an issue with the feasibility study, why should these funds not finance the project up to construction? MG probably requires about $40-50 million in equity, which any of these big funds could do by themselves and indicated that they will do so. Quebec has set up a fund to finance mining start-ups, finance projects to promote the industry and growth in the province. With oil prices where they are, all the more MG is attractive because many of the other projects that have been financed by the government fund are not feasible at this stage. So funding is for me a no brainer, unless I am missing something? Finally, there seems to be another institutional buyer at current levels accumulating shares.
On a final note, the weak C$ is another boon, as product sales prices are in US$!