subdued reaction..idea for mgmt.

Posted this on Stockhouse in Canada but OZ is the determinant market for this stock, so thought I'd copy and paste:
Now this story gets interesting. I don't think AER approval was ever in doubt, especially considering the minister in charge is the Member of the Legislative Assembly representing Hinton and area, and formerly president of the union local of the United Mineworkers.
In my opinion, the market (and I) will want to see how the financing story plays out. As I understand it, Coalspur can draw $157 million from the $350 million loan from EIG before finalizing the balance of some $110 million Cdn. required to fund the mine development. I saw reference to there being an approximate 9 month window for Coalspur to find this $110 million. The EIG loan carries an interest rate of 11%, plus a $7 million fee already paid, although Coalspur only has to pay 8% cash interest with 3 % allowed to be capitalized. So, an annual cash expense of $28 million.
The most recent presentation from the company shows at slide 13 a very messy chart titled "12 Mtpa EBITDA at Various Prices". The chart shows that 2016 is expected to produce 4 mm tons per year, and somehow, 8 mm t/y in 2017. At current prices of $77 per ton, EBITDA is approx. $5 mm in 2016 and $65 mm in 2017. These are very rough estimates on my part as the chart is very difficult to read. What it does show is the terrific leverage to increasing (hopefully!!) prices. Bottom line though is that at current prices, it's going to require some very creative management to get the extra $110 mm Cdn., assuming the project is on budget, without diluting the current share structure of some 700 million shares.
Alternately, if the "first mortgage" carries an interest rate of 11%, wouldn't a second mortgage be at a roughly 18% rate?? I can see that the first few years of production, 2016 and 2017 could be very tight financially at current coal prices. Let's just hope that some economic powerhouse like Lithuania doesn't go splat and send the bond market into the sewer.
Suggestion to management: rather than paying 18% annual interest to villains and usurers, why not offer an income debenture, i.e. interest paid only when the company starts producing income, say with a 12 % yield and convertible at 50 cents per share. Far less dilution, far better terms from the company's viewpoint. Retail investors like myself would love a story like this...I think. You're welcome.