As long as the goose keeps laying 15% eggs BAM wants to see it survive. If the eggs stop or are in danger of stopping BAM may as well kill the goose and sell it. If my calc is correct so far BAM has collected about 40M in interest plus another 10M or so in fees. So they only have about 110MUSD skin left in the game. If they took control because of default or debt/equity swap If they did a debt/eq swap they would own about 75% so would have to sell for 160M to come out whole with 120M and move on. That sounds do-able
" Hard to see that story being anything but positive, given it's importance to ongoing operations"
So it has to be good because it HAS to be good?
You have to go back more than 3 years to see any tracking. Compare 5 year charts of PALL and PAL and SWC. Then PAL dropped the ball on execution. SWC still tracks but at a lower level. Unless you are making money there will be no tracking.
But their BAM interest rises from 25MCAD/year to 32MCAD/year since principal and interest are denominated in USD. On 200KOz that is an cost increase of $35/ozCAD. BAM principal is now 212MCAD. There will be another FX charge in Q4 . I calculate it at about 8M. And so far in Q1/2015 (at current USD/CAD) they are looking at a 15M FX charge. True this is not a cash item, but does show up in bottom line EPS. I'm still staying with -.04 to -.05 loss for Q4.
Look at the consolidated pages. just 4 of them.
condensed interim consolidated balance sheets .
condensed interim consolidated statements of operations and comprehensive loss .
condensed interim consolidated statements of cash flows ....
consolidated statements of shareholders’ equity
A mine has to expand to stay in business. You can't keep mining the same spot over and over. Maybe I'll put it in simple terms - if you sit eating a pie, someone better be baking another one if you want to keep eating. T
" I think that the “market” is way to(o) production focused and does not emphasize making money enough regardless of production"
Agree. SWC mgt has specifically and repeatedly said that they are focusing on profitable ounces, not just ounces.
Yes, the 150M is what they need to continue current oz rate. If they don't get that, stope and other development will development will falter and oz will drop. Drilling results are meaningless at this point unless it is just lipstick.
That is not funding, that is business as usual. They do not get any money up front and have to fund their own operation and E/D. They get slightly above the mkt price adjusted each month. SWC doesn't need funding as they have about 500M in cash. Their debt is at rate under 2%.
The deal was more for JM benefit as they are a manufacturer of cc and dependent upon a reliable sup[ply.
"You can bet NAP got the funds it needed. The only question is whether it is a private placement or a public share offering. Funny that none of this has been announced like last years "
That would be a very material event and would need a PR /6K- therefoer IMO no financing has happened.
"To issue new shares causes dilution, but it can reduce high interest debt principle. .."
The need the 150M for operating plan. And for the tenth time becuase of BAM pre-payment fee it is not sensible to reduce the BAM debt. You would have to pay all the remaining interest (as if it was held to maturity) immediately. So you might as well keep the money for the operating plan. 1B new shares dilutes current stockholders 75%.
Face it, there is no way out. Everyone working for BAM.
BAM interest easy to calculate 170M x 15% = 25.5M USD = 32M CAD.
They also have smaller interest payments for LOC and dbs.
" BAM should finance the additional $150 million...
How? No lender will loan them any money with 170M of senior debt ahead of them. And to a company that hasn't had a profitable year in a long, long time. Equity financing fo 150M at thee prices would be about 1B new shares. And I think BAM can block that.
" Why can't they just operate for a year and use the built up cash to finance any CAPEX in the future"
Because they need $150M capex just to conntinue to produce at the levels you put forth (250K). No capex, the oz drops. A mine is a money pit (or in this case a money shaft). It takes much money to just stay where you are.
IMO your 250Koz is a bit high. I get closer to 220Koz. We will see if they ever release 2015 guidance. Carefully watch for qualifications to the guidance such as "220oz provided we can generate or raise funds for the 2015 plan"
The BAM loan agreement requires PAL to provide BAM with "timely" MONTHLY numbers.
"You really don't believe that preliminary production numbers for January haven't ..."
Did you mean DEC? JAN not over yet. It may be as bigsee4c says -2015 guidance depends upon the money available to carry out a 2015 plan. So it may be intertwined with the ability to do some sort of financing. When the news dam breaks IMO will have preliminary 2014 prod numbers, more drilling info, 2015 guidance and financing news. Will be so convoluted that will take a long time to understand the implications of it all.
IMO no PR until prelim Jan prod numbers are available. That way they can say (at the same time) that things are progressing in the right direction even though (IMO) Dec/Q4 didn't meet expectations.