RE:RE:q2 financials soongoing from 8.56% to 11.3% is automatic when the debt is paid off. going from 11.3% to 20.55% nkl has the option to purchase at the then "market value" as the filing states, at the time the debt is paid off, so we don't know the exact price yet.
their corporate presentation has an estimated time and chart when the debt is paid off. it depends on the nickel price. at $12.50 nickel, debt is paid off in 2 years and at the same time nkl receives $23 mil cash distribution per year. at $9.50 nickel it would take maybe an extra 10 months longer?
the interest rate is low only 5% and cost of production is low only ~$3/lb nickel with long mine life, so there is very high probability that the debt will be paid down. it is just a matter of time.
when asked about taking a loan to pay off the construction debt to increase to 11.3% sooner, Anthony Milewski said it was too risky when they have only one income stream.
imo it is worth the risk. it would essentially be swapping one debt for another, but they immediately increase their cashflow with the jump to 11.3%.
nkl reminds me of edv. edv had high production and was generating a lot of cash with very low p/e around 5, but because of their high debt, their share price and market cap was very low. the small market cap with high debt gave them extremely high leverage. as their debt was paid down, their share price shot up.
nkl is similar but risk is lower because edv had to renew debt as their due date came, which nkl does not have that problem. and nkl has very low cost of production relative to metal price which also reduces risk.