Risk on, page-16

@Trades4days, @VYR still left some maths for you to do, I'll try to lay it out a bit clearer.

With the current mine plan, HGO may only have an interest bill of $1,560,000 in total before the loan is paid off and we are debt free, BUT I am thinking/hoping maybe we pay the loan off over 5 or more years and use some of the funds to keep drilling and building up the resource base.

Let's look at the most expensive case for HGO, in terms of interest payments, and work on the $26m loan being fully drawn and not repaid, interest at a rate of 12% pa would be $3,120,000 pa on this facility

with the 3 mtpa mill operating at half capacity, 1.5 mtpa (current mine plan) we would be producing 14 ktpa copper which is 31 million pounds of copper metal each year. In the last week copper metal has increased in price by 27 c/lb being an increase in annual revenue for HGO of $8.37m pa

@Trades4days Back to your question about the effect of increasing interest rates, if the interest rate increased another 1% on top of the 12% interest rate, i have conservatively assumed, then the interest bill would increase by $260,000 pa for a fully drawn $26m loan, as VYR pointed out it is unlikely the loan will be fully drawn for long and it is likely the initial interest rate will be lower than my guess of 12% as well.

In summary when our potential annual revenue has increased by $8.37m pa in the last week, right now I would not be too concerned about the restart facility interest rates and more concerned about how to buy more of this company.

Looking at it another way, with current Cu price and forex and producing at 1.5 mtpa HGO will have an EBITDA of $50m pa which makes a total interest bill to restart the operation of $1.5m look insignificant. Or if the lender allows management to repay the loan over an extended time frame, an ongoing interest bill of $3m pa if we keep the facility close to fully drawn and have 3 drill rigs building up the resource ASAP to increase the production to 3 mTpa and hence increase EBITDA to $100m pa. The plant is already in place for 3 mTpa.

The copper price and the price we hedge our production, in order to obtain financing, are the most important factors for HGO right now IMO


gltah





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