Whilst the current copper price is about A$1.30 a lb. less than the assumption in the economic study I think one can be hopeful that when the operation is ramped up in a years time governments will have protected their patches from any severe damage from recession and the copper barometer will be reflecting a more positive sentiment. Governments sure took their roll as a protector of their economies very seriously when the Pandemic struck. Its hard to believe they will sit and watch all that good work go down the drain which is what the market is anticipating is about to happen.
Keeping in mind that "he who hesitates is lost" we can but hope the finance is in the bag. If the drop in price persisted for the next three years and nothing else in the study numbers changed we would still be generating free cash flow of 5x the debt which should give lenders plenty of comfort. I'm not sure what the numbers are for mine development but the big banks will lend property developers 70% of total cost or 50% of the end value of the product.
Hopefully any cost increase will be offset by gains from the recent drilling and plans to raise the gold recovery %. The expected increase in mine life should be a very positive outcome.
The following screen shots from an article in *'s Mining news give a good perspective on all the checks and balances that are necessary to satisfy the lenders preconditions around mine planning, feasibility and cost estimates. It's a long and torturous route our team are travelling.
HGO Price at posting:
5.2¢ Sentiment: None Disclosure: Held
