Ann: Trading Halt, page-38

Extract from s. head ref financing. So $150m of the raise is early capex, leaving 1.15bn to fund. Question... Does Gold Road part leverage its 20% cornerstone into project equity at some point? 70/30 debt to equity will still require another $345m equity. Half that would be raised by off market sale of 50% of GOR holding to 3rd Cornerstone Partner? This way, GOR becomes operating partner in Hemi. I've always believed it's 20% equity holding was purely a blocking protector? Thoughts...?

So how will it be funded?
CFO Peter Canterbury said on a call with analysts the De Grey board is yet to decide exactly how the project will be funded, including the mix of debt and equity that will be sought to bring Hemi into production.

Full construction activities at Hemi won’t take place until the second half of next year, with shortlisted debt providers to peruse the DFS and independent technical report ahead of the issuing of term-sheets.

MD Glenn Jardine said the raising would get De Grey through to the middle of next year without settling on what it needed in terms of debt.

“In terms of the interim raising, I think we’re talking about approximately or at least $150 million of that raising through project activities and also the ordering of long lead time items coming off that final capital cost number of $1.298b for the plant,” he said.

“So that’s a positive outcome, but in terms of any other details we will continue with looking at all the options around project financing and then we’ll come out with our final equation on that.

“But as Peter pointed out previously the debt-carrying capacity of the project is not limited by the cash flow from operations. So the potential is that $800 million is buried in a positive fashion in terms of the potential debt-carrying capacity of the project.

“So we don’t want to necessarily start doing the subtractions and additions and so forth right now because there’s a lot more work going on.”

Could De Grey consider a sell down to help develop the mine and
deliver returns for shareholders? That, for instance, was the path taken by significant shareholder Gold Road, which brought South African giant Gold Fields on board to build and operate its 350,000ozpa Gruyere mine.

Jardine said the best way to maximise returns was to bring the mine into production.

“We consider all options when it comes to developing the project and we’ve been modeling that since 2020, actually, probably mid 2020,” he said.

“So we’re not saying that we’re developing this from an ideological perspective or that we want to play in our own sandpit up there in the Pilbara.

“Our decision making is purely driven by maximising shareholder returns. And of all the options that we’ve looked at to this point, we maximise shareholder returns by De Grey bringing Hemi into production.”