Gee Moyston!Lachlan's has got the funds for the blue sky...

Gee Moyston!

Lachlan's has got the funds for the blue sky drilling and DFS stage which is the hard bit. The current placement is at what is probably a very cheap price because this is the really risky stage.

If a bankable DFS emerges the next round of funding will be a breeze. A long list of folks will be putting their hand up for involvement in the project.

The ones who will benefit from the execution of the project with the least risk are Freepoint and Trafigura and they have reputations for providing finance as a sweetener to secure their take off contracts. In the next risk group are people who buy royalties. With a bankable DFS bankers should also be interested if Lachlan can give them a charge over the companies assets. That would involve sorting out the SA government's charge over the assets which they currently have to secure the rehabilitation obligations. On that front the QIC (Queensland Investment Corporation) have recently established an insurance type scheme where Australian miners can pay an insurance premium rather than tie up cash on deposit to secure bank guarantees or blister their assets like we have. The QIC insurance premium is set at the equivalent cost of the bank guarantee in these early stages of operation.

Shareholders would likely also be keen to chip in if necessary if the plan is a good one.

Lets hope the drilling continues to produce the expected results and the mine plan is efficient enough to generate cost and revenue projections that deliver a bankable IRR given the risks involved.