PGI, page-33

..all tempered of course by the looming valuation by DRG owned institutions i.e. a big don't argue, with new unknown investors to be introduced at unknown % at project end. capped at 100,000 oz p.a. thereafter post 2019.

Not sure if it means plant needs to be dismantled and moved or not to another site.

Logic suggests that the plant stays where-is and existing void slowly filled up and a longer life with promise of nearly 10x higher grade imported starting post plant end of current project life (the project being the conversion of active old tailings dam into safer dam.) The subtle point here being that 10x higher concentrate isn't that helpful given 100,000 oz p.a. restriction.

On this basis, current PGI shareholders are exposed to 50,000 oz p.a. if its a 50:50 PGI Govt deal. Here is the problem.

If valued on a share of 100,000 oz with say a $1,000 free cash, then the NPV over 10 years from 2019 to 2029 is about $600M. The new investors won't want to sit at single digit % shareholding. Typically Govts want 30%. DRG doesn't have a lazy $ lying around for a single little project like this, so it has to be BANCO DE RESERVAS DE LA REPÚBLICA DOMINICANA. and their balance sheet is Total assets of only $320M. Net equity is $21M. Liabilities iare $299M. So they must be acting as a consolidator. So what returns on their participation are they expecting from a share in $180M cash flow.

I have had exposure to such things and it is right royal. Decisions by the cabal of Bankers on banking fall to the lowest common denominator, usually the Bank participant with the weakest balance sheet, who are constantly rubbing their good luck rabbit's foot in fear. Not pleasant because they are just a perennial problem, with questioning and refusals to do anything or change anything.

How is valuation conducted to allow new shares to be issued into the new entity. What voting rights do the NewCo shares have, etc, etc ... the uncertainty abounds here, so don't expect PGI to jump too high just yet.

The final question, what happens to the cash inflow from issuing new shares to these interlopers? Yep, you can dream of a 90 cent/share windfall but it doesn't happen that way. So how will it happen?

The most obvious answer is a low valuation and new equity money must be spent on other projects, presumably ONLY in DR and any disbursement limited to some very modest amount.

So the covenants on this deal will be something to see and certainly be something of lead in the saddlebags. So expect no equity, just a revolving line of credit subject to Bank approval in return for (say) up to a 30% holding. Sounds ok, but now PGI are subject to whatever the lending rate is and they are sole lender hence they extract value through high interest rates (equiv to low dividend returns on the shareholding, and above market rate margin on loans.

My whole point here is that you can see it can get complicated quickly, and very messy. Those who are breathless in their posts really need to temper their expectations.