SimpleSimon I worked in mine finance for 15 years & I think you have jumped to some fairly big conclusions here. You are right that typically a deal this side would be done by one bank, well in the past this would have been the case. I think the norm will be more likely syndicates for these smaller amounts probably 2 - 3 banks depending on the size. CS have had major changes but are seemingly still willing to launch into new deals. I think their strategy of securing the lead finance position on deals very early such as MYG & ALK shuts out the competition particularly Macq. They then look to farm out some of the amount such as what we are seeing with MYG. The closeout of the 50k hedge I imagine would have been on the advice of Noah's Rule as its very typical of them to try & capture value where possible. So instead of CS having 70% of the debt i.e. $11M +$25M they probably now will only be up for the $25M with the rest coming from one other bank I would suggest. With one or two banks probably missing out because as you say to bank $12.5M wouldn't be worth the while of the bank. Although there is a decent hedge to be put in place eventually of I would imagine 150k ish ounces so there will be plenty of margin in that for the banks, however considering they closed out the forwards, perhaps may look at a collar or some pts. I would say CS are very much still involved & we await to see who the other lucky winner is. Anyway you spin it MYG has just reduced the required debt required by $15M & I think bought gold at a reasonable price, (could have been a bit lower but easy to say in hindsight!) Gold has held $1550 & the bears could get caught short here as the whole market has been anti gold. I love it when a whole market gets so committed one way. I'm no gold bug, but I think this case we could see gold snap back through $1620 on short covering alone. The fun has just begun for this company!
MYG Price at posting:
7.3¢ Sentiment: Hold Disclosure: Held
