apart from traditional project finance debt, ATV can access the streaming deals,such as provided by sandstorm gold
http://www.sandstormgold.com/home/
these deals involve the financier making an upfront payment and then taking delivery of a percentage of the gold produced over time
for example if ATV secures $90 million project finance ( 65% of $140m) and we the punters chip in another $15million then the streaming company advances the balance of $35million . The deal may be they advance $600 an ounce against 60,000 ounces and take deliver of those 60,000 ounces over a number of years, you can see the type of deals they do on the website, they are not the only outfit doing these type of deals and there are a number of ways to structure them
in the example above the punters lose the profit on 60,000 ounces to get the project up and running but are saved the pain of stumping up $35million or being diluted.
this is only an example, it shows the finance can be done without the punters having to chip in to much but it comes at a cost
this cost diminishes as the gold price rises
- the level of traditional project finance increases
- as the market gains more confidence that shareholders will not suffer excessive dilution, the share price rises thus reducing the dilution on the equity component
- more mezzanine financiers are attracted to the gold space and the deals become more favorable for the borrower
if you want to maintain your own % interest in ATV assume a $15million equity component ( probably via underwritten rights )and start saving
the key for ATV in a streaming deal is to only use Touquoy for the deal so the financier cannot get the benefit of any exploration upside outside of that mine
ATV Price at posting:
4.0¢ Sentiment: Buy Disclosure: Held
