funding for juniors

a lot of frustration out here wrt FUNDING and rightly so... how difficult can funding a sub $100m project be, right?

then a few days ago a tiny ASX listed company announced that the sovereign fund of Abu Dhabi is "funding" their US$300m project... wow, that got me excited.... they were probably getting 15X their MC as debt and that too from a big name fund like this sovereign fund...

getting finance for a junior is not that difficult I thought...

until 4 pm on Friday (yesterday) they drop in another announcement stating that the funds are not coming from the sovereign fund but blah blah blah - but the funding still coming they state... the identity and the connection between their finance arranger and this big sovereign fund is not what they announced just a couple of days before...

just got me thinking, what kind of a finance deal could it be when the DUE DILLIGENCE levels seems like ZERO.... what other gremlins could hatch out of this IF this deal still goes through.... could be one of those death spiral financier who will one day get hold of 98.2% of your register via a DOCA leaving you holding 1.8% of your holding... if I was the shareholder in that company I would hope the finance deal falls through as there is now a problem of TRUST in the management and their capabilities...

coming back to EGR / KNL, it got me thinking that FINANCING OF A MINE in far away Tanzania via a GERMAN Bank guaranteed by the GERMAN GOVERNMENT would definitely mean jumping though countless hoops and even then not be able to close the deal as and when you expect... the due dilligence from the bank's/guarantor's side will be immense and ONLY 24 carat gold project will be able to tick all boxes... the time frame for such an approval could be matter of different discussion altogether... throw in some (not some, but actually HUGE) tantrums from the govt where the mine is to be built and you are now looking at an HERCULEAN task if not an IMPOSSIBLE task...

not sure what will happen to our project financing for the Tanzanian project until the Tanzanian govt actually does something that could clear the hurdles... our alternatives do not seem that flash too if you look at the above ASX company (just do a search and you will know what I am talking about)... I do not know much about that deal other than just cursory glance over the hedge to see what the buzz was all about this week all over HC and twitter... but I do hope that when we, one fine day, get our finance, it is ONLY through some big bank at friendly terms and not your corner shop loan shark... we have had 5 years of delays and the least we can expect now is some smooth sailing whenever the seas calm down... don't have the stomach for any other mishaps re financier now... we might as well close down EGR and book 100% loss and move on if that is the case...

not happy with the delays here but feel like Tanzania is the bigger culprit than anything else... they need to get things sorted ASAP... doing no one any good - neither themselves, nor many many investors like us and the companies wanting to deal in Tanzania...

sorry for the long post but that other ASX deal got me wondering as to how bad the companies are in doing their DD... I think we @ EGR / KNL are at least some way better than them in this regard... still the sp is in the doldrums with 3-4 CRS back to back in the last 18 months... all for petty cash... Kwinana is our last hope and if Tanzania goes bust, it will be less of a shock to us as we are diversified now for the better...