RE:RE:RE:RE:What If Renaud Hinse Wanted To Play, Santa ClausFbedard:
45 million bucks is a lot of capital to carry as a loan from any bank in a two year preproduction period. Even at a variable rate of 3.5% interest, Abcourt would still have to pay back (only interest) of $1.6 million (not including principal) each year for a loan of that size. That would be in addition to any repayment costs needed for any present and future borrowing costs that may deemed necessary to fund further development of the Sleeping Giant Mine. This is getting expensive!
On the other hand, since it appears that only $1million seems to have been borrowed as yet from the available $5 million bank loan money that was made available, perhaps the Sleeping Giant Mine may yet provide some of the needed additional capital for the Barvue mine development costs.
But it also remains to be seen what will happen to the variable rates that are available today. It would appear that these rates are poised to rise? Or will a continuing covid crisis put a damper on these?
There still remains much uncertainty as to exactly what formula the company may choose to use to fund the Abcourt-Barvue project. Perhaps the company could lock in some kind of longer term loan at a reasonable cost? But the cost of that loan could be considerably higher than 3.5%.
So it remains a matter of some question as to how they could pay back the principal and interest for these two years of preproduction if these repayments must be made on an annual basis.
If the Sleeping Giant mine doesn't come into commercial production fairly soon, then perhaps some small private placement could be done to get the needed cash to cover the two year pre-production period for Barvue?
A private placement might then be used to pay for the initial 2 year cost of this loan.
As well, just like a mortgage, the bank might want some access to the title of the Barvue property if they needed to foreclose on the loan? They don't like to take too much risk. They may even want to have access to the title of all of Abcourt's assets?
A spin out of the Abcourt-Barvue property may be necessary before any serious bank loan discussions actually begin.
Abcourt management must be really scrambling to try to figure this out and a lot of meetings may need to take place with the bank. It's complicated!
So I suspect that it still early days.
However, we know that the Abcourt-Barvue project is no longer on the back burner of this company's plans. But, further discussions and consultations still need to be made. It all takes time.
Looking forward to a better year!
All the best! Java