RE:RE:RE:RE:RE:RE:Flies In The Ointmentmetalhead666 wrote: They are NOT borrowing anymore money so rates don't matter. They are fully financed and have contracts in place. They just hedged off a pile at near all time high prices. The dliution is nothing considering the 350 MILLION $ free cash flow for year after year.
There's not a mine in existence that builds a project for free! All the financials are based on FULLY DILUTED share count which remains far lower than most
Move along...you seem better suited for some mutual fund or ETF
1) Smart to hedge at the current gold price. Agree it further de-risks the project. Would have been even better IMO if they hedged a larger number of ounces. The term for delivery of the 100,000 ounces is March 2025 to December 2027, but according to their September 2021 Feasibility Study, they expect to produce 325,000 ounces in each of the first five years, Thus, they have 100,000 out of an expected 882,000 (325,000 x 2.75 years) hedged, or 11%. That's not "a pile" by any stretch of the imagination. Maybe they couldn't find a counter-party willing to hedge additional ounces at that price....?
2) You have no idea as to whether or not ARTG will need to raise more money via debt or equity raise before first pour. Why do you think the company issued a Short-Form Base Shelf Prospectus on March 23? If you bothered to read even the first page of that document, you'd discover that ARTG has reserved the right to issue up to $400M worth of one or a combination of the following securites over a 25 month period between March 23, 2023 and March 23, 2025: Common Shares, Warrants, Subscription Receipts, Units, Debt Securities, and/or Share Purchase Contracts Why? Because ARTG realizes they may require further funding to complete the project up to and including first pour. This is a safeguard as even ARTG management knows that costs could increase between now and first pour, something to which you seem to be oblivious.
3) Changes in interest rates do matter:
a) Page 8 of ARTG's September 2021 Feasibility Study estimated that the debt they carry will be at an annual interest rate of CDOR + 4.25% up to the date of completion, reducing to CDOR + 3.75% once the project is in production, over six years.
In September 2021, the Canada Three-Month Interbank Rate (CDOR) was around 0.60%, which would have made the interest rates ARTG would pay on their debt 4.85% and 4.35% respectively.
Today, CDOR is at 5.03%, making the interest rate on ARTG debt 9.28% and 8.78%, or around double the rate at the time the 2021 Feasibility Study was completed. If you don't think this makes a difference in their 2021 cost estimates, you're delusional.
b) Should ARTG need to borrow more money before first pour, even more total interest will be due throughout the six year loan period. If they decide to issue more shares instead, it will cause further dilution.
Points 2 and 3 above puts into question the accuracy of all the following estimates included in the September 2021 Feasibility Study: Operating Cost (CAD/Ton), AISC, Free Cash Flow, Payback Period, IRR, and NPV. If you think all costs will be around the same as outlined in that September 2021 Feasibility Study, you're living in a fantasy world in my view. The price of gold at that point will also affect the FCF, Payback Period, IRR and NPV, but who knows what the actual numbers of all of the above will be given the changing economic conditions over the past 18 months...?
An updated Feasibility Study using current rates and other data would clear up a lot of the above and bring the estimates into the year 2023 as the project gets up and running. Other companies produce updated Feasibility Studies when their existing version becomes dated in a changing economic environment. Why not ARTG?
Bottom Line: Educate yourself before you type. Making up statements not based on the reality when information can be easily found if you know how to use Google and examine the information on ARTG's own website makes you look foolish, like I just demonstrated above.
I win.