"[F]ree cash flow generated from the gold over its first 5 years of greater than A$120M" - so 24M annually. However, with the current and predicted level of debasement it is a certainty that hard assets, such as gold, will go up, it's not an opinion anymore and the pullback appears to be finishing. There is genuinely no predictable roof for gold in the current market.
Furthermore, even at this conservative estimate of 24M free cash flow annually, the remuneration offered by Koala appears weak. The only reason I can think of for this agreement, is that the team knows something about Last Chance that the market doesn't. With $15.7M we should already have more than enough for an aggressive 2021, so this weak conversion from assets to even more immediate working capital has me scratching my head.
Taking solace in the term sheets non-binding nature, but interested to hear additional thoughts.
WRM Price at posting:
55.0¢ Sentiment: Hold Disclosure: Held
