Afternoon William,A Bankable Feasibility Study (BFS) does not...

Afternoon William,

A Bankable Feasibility Study (BFS) does not guarantee debt (bank financing). There are a number of reasons for this including:
1. The banks that are approached may not accept some of the assumptions made in the BFS. Example - long term pricing of the commodity or long run exchange rate.
2. The banks may not like the jurisdiction of the project namely the country in which the mining operations are located. After all, would western banks invest in Russia, Iran, North Korea or similar today? No. Not a problem with KGL and jurisdiction of NT Australia, I agree.
3. The banks may not accept the commodity. You may remember that all 4 commercial banks (Australian) declined to fund Adani's large coal mine. Ultimately Adani has funded a smaller mine from its own balance sheet.
4. There may be more compelling and lower risk projects that that bank wishes to finance. Any lender will have lending caps / ceilings and will want to lend to lowest risk ventures. Example - assume BHP had not taken over Oz Minerals and OZL was looking for funding for its West Musgrave project. The banks would conclude that Musgrave is larger, longer mine life, OZL has existing cashflow from its S Australian operations and OZL has a successful track record having recently (~2019) brought Carrapateena on stream. These 4 factors probably make Musgrave lower risk. Given the choice, the bank would allocate capital (debt) in favour of Musgrave before KGL.

In short, "bankable" means the study has been done in sufficient detail and accuracy to attract debt financing (from banks) but there is no guarantee that that funding is forthcoming.

Funding is normally part debt, part equity and that is where my prior mail comes in. The raising of 50% equity for KGL @ 14 cents will substantially dilute your holding.

Finally, your comment re "well heeled well informed" investors. Research Theranos and realise that George Schultz (former USA Secretary of State), Rupert Murdoch, the Walton Family, General Mattis and others lost a collective USD700-million that was invested in Theranos. All these people could be described as well heeled and well informed yet they failed to do adequate due diligence and failed to see the warning signs.

Regards