I don't think the PLS prepayment is in perpetuity, and seen no evidence to that affect provided here and elsewhere just assertions, and agree it will incorporate some interest payment like you have also suggested. I am also not sure why some are now so set against them as well on this forum, as I see them also as a form of project finance. Without interest payments my thoughts on the numbers are in this post - albeit I suspect they will be slightly higher given the need for interest which is a typical term anyway -
Post #:51938459.
Just commenting on your post and I know you also are suggesting prepayments are an ok source of partial finance as well.
Prepayments can be used and are a source of finance and have their place is my point in mining developments, especially for explorers seeking to be miners. I am not sure why the argument, and there seems to be a number of assertions by some on what the prepayment terms over at PLS are.
Some perspectives on prepayments and why:
Offtake Prepayment Financing - Wright Legal, Perth WAGXY, at the start got some prepayments from recollection as well, and if I also recall they were getting some very high spodumene prices back in 2017 for example (before prices fell in general for all).
Microsoft Word - GMM266 2016-07-12 Mt Cattlin offtake (asx.com.au)Here is a prepayment offtake for a DRC project btw - yes there is some around even in DRC:
Mawson West Secures US$50 Million Prepayment and Offtake Agreement (yahoo.com)Mawson West Operations & Corporate Update | ***** NewsFinally I want to say this final point - in any negotiation, if you are an explorer seeking to be a miner (and therefore have limited access to your own equity to fund a project) then Offtakes are critical. With or without prepayments, offtakers know that you need offtakes for mining finance so any pressures on price discounts (as some allude to) will be there whether you secure an Offtakes with a prepayment or not. It is all about what is in the Agreement itself and there seems a lot of speculation what may be in PLSs agreements btw, which in itself is a guess.
Offtake Agreements · Offtake Agreements in Project Finance (globaltradefunding.com)As I stated the other day - it would have been nice if one of those Offtakes had a 5 year terms as well as against a 3 year term to complement the Ganfeng Agreement, but now it is all about project finance for AVZ and getting that offtake for sulphate. Payback periods are a key, and we are still waiting for prices to turn to the DFS levels, so bankers tend to be a lot more cautious when they give out funding hence why my comments around a 5 year term in the first place here, given the DFS was based on a higher price but had a payback period of around 3 years from recollection (i.e. the insurance policy of why I was saying 5 years better than 3 when looking at it from possibly a lenders perspective - more insurance etc) I would have thought a prepayment would also be viewed favourably by the banks themselves btw (provided the prepayment is a true prepayment in that it is essentially return of prepayment with a little interest etc) -
Post #:52133131A different perspective and obviously we will never know why PLS wanted a prepayment - I suspect part of the reason is that they are still awaiting for price growth to aid profitability and to better manage self funding (in part) expansions where possible. Obviously they preferred a prepayment to more dilution btw and/or traditional bank lending - we can speculate on the reasons but I have given my thoughts above.
All IMO
