Downsides: - Pre-payment lowered from $27M to $10M... meaning more debt is now required. - Likely debt will be at a higher interest rate than the margin given up with the previous pre-payment deal. - Rather than concluding in Q1, likely be Q2 to sort financing.
Upsides: - No longer beholden to the one international trading company (Trafigura?) on offtake pricing. - AGI can now force the joint venture (MLV) to sell the concentrate to AGI quite cheaply, leaving a lot of margin for AGI to on-sell the concentrate internationally. I understand that this is how the other mines in Cuba are very profitabe for the international companies operating them... - Asean likely going to get more and more invested/involved to coordinate the debt.
Obviously the $27M pre-payment would have been the preferred option - even if not the most profitable one - but here we are. I think some of us are not so surprised given how long it has dragged out for.
I have a feeling that Trafigura or whoever it was they were negotiating with may be trying to swoop in and get it for 0 in the event AAU folds.
AAU Price at posting:
0.4¢ Sentiment: Buy Disclosure: Held
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