Trust .... a fickle thingInsightful commentary from another bulletin board regarding Sprott Resources Lending Corp and the fallout of the Pure Gold Mining debacle.
The poster asks the question "who will trust them them (Sprott) in the future?"
from another board:
There is nothing hidden going on here...Sprott Lending (nothing to do with Eric Sprott himself BTW) has simply breached the original agreement because they are afraid of losing their shirt on the PGM debt + gold loan facilities (and may be other underperforming loans) because the PGM grade and production have been a fraction of what was expected by the Feasibility Study because of lower ore grades and higher mining dilution. That is always the risk when you start mining. Sprott Mining Investment Bank is a relatively small outfit in terms of its ability to absorb bad loans compared to much bigger Investment Banks.In retrospect Ascot should have been leery of relying Sprott's ability to respect the agreement due to unforeseen stresses on their lending book. Ascot could have sued them for breach of agreement but that would have resulted in greater delays than finding an alternative source of debt financing.Any lender will have to assume the operational risk that arises from mining in real time vs projections. Some mines outperform the blueprint some underperform. There is no way to be sure upfront...So my understanding is that Sprott put up a new condition that can't be met in reality to get off the hook, period. Who will trust them in the future?