option c, page-3

bigjonos,

It can be done, See PGI for instance,

During 2012, Macquarie provided US$45 million to PanTerra Golds' precious metals tailings recovery venture in the Dominican Republic [MJ 3 August 2012].

The deal was:

Forward gold sales of 30% total gold production (126,000 oz) effected at US$1321 per oz

The balance of gold (309,360 oz) and all
silver production unhedged

At the time it was made it was a fair deal, but you can see the problem with hedging with POG rising.

Bottom line: for PGI obtained $45 M upfront for about 40,000 oz p.a. for three years crimp in future sales.
= = = =
With POG now, for the same $45 M we would forsake 30,000 oz upside from any increase in the POG.

The calculation is dead easy for those with the inside info:

Could $45 M, or something around that mark, lets say $60M and 40,000 oz, would FML pick up substantially greater value than the opportunity cost of the hedge in increased production.

Has McBank been asked? PGI had the unproven Albion technology risk. But McBank did the deal.

FML has the exploration/delivery risk.

Did McBank say no if asked?