First of all, – a ‘bankable feasibility study’ represents a base...

First of all,
– a ‘bankable feasibility study’ represents a base case for financiers;
– a ‘definitive feasibility study’ is the final study undertaken to determine whether or not to proceed with a project and is based on detailed capex and opex budgets

A problem for MYG is that it released the BFS first and then the a revised - DFS (the one that increased net profit by 30%) to include recent drill results. This is not bankable yet as the DFS was produced in-house (says there in the DFS)
. Another problem is that it hasn't included the Sandstorm financing.


Lets just assume for a second that the DFS is accepted as a BFS by the banks, will they finance it? Banks generally decide based on the applicant's ability to service the debt. From the cashflow released in the DFS, we can see that it takes roughly 5 years payback period at 1750AUD gold. Why does it take 5 years to pay back if it is robust?? and this was extremely high gold price.Now that it has dropped to 1450AUD, this will take much much longer.

Another key thing investors have left out is that cashflow is not uniform. Some years they make more money than others. From my calculations which include Sandstorm cut, MYG will be barely making any money in the first 4 years. Red indicates a loss and this is EBT, so tax has not been considered yet. Sandstorm 500$/oz payments needs to be cut out as the DFS was released prior to Sandstorm announcement.

The 2015year looks respectable at 14m but one has to remember that in year 2015 is the year they need to build the decline to commence underground mining. Underground development is listed as 29m in the DFS. This is supposed to be funded out of cashflow but because year 1 is a loss and year 2 profit dropped, this is going to be extremely tight. Open pit only lasts for 2 years.

As the years go by, it is clear that MYG only makes big money in 2020 and this is the bulk of where the money is assuming they actually fund underground development. Will banks take the risk for such low initial cashflow and wait to be repaid in 2020?

Payback period was 5 years at 1750AUD and likely to be over 7 years at current gold price. Very tough i say.

Would be interesting to see if banks will even accept this revised-DFS as it is not a base-case for them to make an evaluation from.

If MYG is unsuccessful in getting finance, it is in a very tough spot as they have very little cash, still have over 5m in debt and still drawing from Sandstorm convertible loans which will be turned into shares if not repaid.