RE:Unaware of the full details of the Credit facility, butJimpro,
Matthew Gordon called Mark Selby (video call) to clarify specifically the details of the financing,
arrangement, YouTube link below.
https://www.youtube.com/watch?v=hVhB5H4zI3M
As you have indicated the rate of 0.79%/month (10% per annum) is not bad at all , compared to what the credit card companies are charging people (some would charge 24% per annum). Here are a few more details:
- amount C$35M
- 1 year term, extendable by another 6 months
- no principal payment required, until end of term
- no special string attached, like collateral
- only pay interest on the amount drawn down by RNX, e.g if they need A$15M then they would pay interest on that amount only.
- reason for $15M required for closing was because the BD (bought deal) has brought in about $10M (I am ignoring the conversion between A and C dollars). Interest per month ~A$100k/mo, which RNX should be able to handle comfortable.
- there was some rumour (just rumour) that Sprott Capitals offerred a loan at a much higher rate, but I have not seen anything in print.
- Acording to Mark S, the lenders were chosen through a "competitive tendering process", i.e. different lenders can come in with offers ane NRX would pick the most suitable. In this case they pick 2 (to spread the risk ) and they are private companies with good reputation, names not revealed at their request.
- Also, near the end of the term, if they need to have another LoC (always good to have this available to have some wiggle room, just in case you need money for something) they could arrange a new one, either with the current ones or other lenders , at a more competitive rates, once their operation is more profitable, when the production rate could be 100,000 oz/year from the current 40,000 oz/year (staring April 2019).
Another item worth pointing out for closing the deal was some poster was referring 56.9Ms were issued on closing of the HGO deal, and the share outstanding was 600Ms. This is not accurate.
- OS before closing: 500.88Ms
- OS after closing: 550Ms, since approx. a non-refundable 6.9M (= A$4M) shares were issued some 70 days (40d for exclusive DD +30d for closing preparation) before closing, hence only ~50Ms (= A$21M) were issued on closing (plus A$25 hard cash)
In some other posts, I have indicated the potential profit that RNX would be raking in to illustrate that the company should be able to pay off the LoC at the end of the term. Agreed with you that the debt for acquiring the HGO deal, including the mill and the lands that contain some 1.2Moz RE,
is nothing compared to the debts of other companies. It's in a much better financial situation compared to a nearly bankrupt state before the FDV discovery (Mark S said in another CRUX? video that the For Sale sign has been taken off the front lawn of BH and burned) . Imagine if it hits just another FDV.
GH11
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Jimpro63 wrote: 0.79 percent ( 10% per annum ) seems like the only Interest you may pay per month on any used portion. You have to notice that they only requested it for a 1 year term ( probably the minimum term available from a large lender ). We had "0" debt to start with , so pretty cool to have our own Mill now, some extra Gold reserves and tons of new exploration property in Western Australia. You should research the other mid-tier Miner debt situations ; we owe nothing compared to them .