The Chinese paid ONLY $87m for Yukon Zinc - what a bargain that's turning out to be...
Once the DFS is complete, and (hopefully) a decision to develop and commence production is made, it will be interesting to see how the funding is provided.
Of course, Macquarie have a right to lend up to 50%, however it's also possible that Hugh Bresser may want to have Chinese expertise on-board in order to fast-track the process. If that were the case, it would be even more interesting to see if this came from debt, equity, or a combination of the two. As the article you posted mentioned: you need Chinese partnerships in order to access some Chinese technology.
I would possibly suggest a combination of debt and equity would be a good way to go. Why?
A lender lending money to a company it also owns has an added incentive to reduce the cost of funds to that company - this will mean lower cost of funds, higher project NPVs, profits, and thus higher returns for the company. The lender then has an incentive to lend under terms that will also maximise the value of the company, not just minimise the risk of losing its loan investment.
The above already may apply to Macquarie (provided they think along my untested line of thinking), however would also apply to the Chinese, if they were to take up debt and equity in OVR....
Comments, thoughts? It's getting late, so it IS very possible I'm not thinking entirely straight :)
OVR Price at posting:
32.0¢ Sentiment: None Disclosure: Held
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