The problem is that the 15% or 7.5% is not just profit forgone but also now a cash drainer for MYG. The effect compounds and affects earnings on a larger scale.
For example, if MYG produces 50koz, it won't be making money on 7500oz and it will need to fork out the difference between 500$ and total cost. This is what i mean by "debt" for life. It is different to a gold royalty system such as franco nevada. These systems charge 2-3% of gold revenue.
This is why i stepped away. The capex was too big, the numbers were not enough to back full finance. They had to do this deal.
I stand to be correct on cash cost. Even PRU who has a cash cost of 600~ has a total cost of something like 900$/oz. This is in Africa and it is open pit.
MYG Price at posting:
9.4¢ Sentiment: None Disclosure: Not Held
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