So what are peoples thoughts on whats going to happen here...

So what are peoples thoughts on whats going to happen here regarding funding of Makhado?

What we know is they need cash and they need it soon. They need US$1.8m to finalise the land holding purchases for Makhado, and they also need US$10.3m to pay off the current IDC loan.

I know MCM have consistently spoken about an equity investment and it has me worried that they spoke about new equity issues in MCM directly. I think an equity investment in MCM is probably one of the lower value options for shareholders.

I know they only spoke about a minority interest sale in Makhado, but I'm wondering if its better to sell down a bit more of Makhado, essentially for back costs, and keep around 30% interest where the new IDC loan will cover their entire funding requirements for the Makhado development. A small Entitlement Issue to current holders would be fine for working capital over the next 12 months until development is complete and steady state production is set.

Whilst this is a fairly sizeable asset selldown, it would still provide a high quality asset, and would still provide an EBITDA or around $14m at $140 / tonne for HCC and $75 / tonne for thermal coal. If prices managed to remain the same as now then there is upside. So essentially they would have a fully funded approach to getting Makhado into production with the asset producing EBITDA of more than the current market cap, whilst maintaining the current equity components in the GSP which is the big growth area for MCM long term. If they arrange this financing through equity issues in MCM, then they would need to at the very least double current SOI and this would reduce current holders interest in all assets to less than 50% of the current levels. A selldown of Makhado into the 30% range (partner gains 37%) makes a lot of sense to me.