AUZ Chart, page-4195

EDIT: to confirm this in response to HAC30's prior post

Yes, that's what I'm saying (because, it isn't).

IRR has ZERO positive correlation to cash flow certainty. In fact most often the relationship is inverse, because equity is willing to accept a lower IRR due to higher cash certainty. There are many many projects touting very high IRRs which are completely unfinanceable with senior debt. Yet there are others (lower than 15%, which I have arranged and completed) which are very financeable, and with much higher senior gearing than 60% (sometimes up to 90% for instance on PPPs).

Remember what IRR is - a present value of future cash flows based around a whole set of assumptions. Assumptions which may prove wrong, or may prove right. But the more that these assumptions can be removed and replaced with knowns, the more certain and therefore financeable the future cash flows become and, most likely, the lower an IRR equity is willing to accept.

As regards commodity price and floor settings, this is also not exactly mind-blowing. Volatile commodities are normally volatile in both directions, and so normally an economic 'give' is made to offset a floor. The simplest would be a ceiling, capping prices paid by SKI, but there are many other ways to slice the pie such as applying discounts to base exchange prices once the floor is met.

Bear in mind, senior debt does not care about the upside. All it wants is its interest and principal back. And in my position, as a shareholder, I'd be prepared to give up some of the potential future cream on this project in order to get financing. As I suspect (hope) SKI is willing to give up a little bit of cream while prices are below the floor in order to sure up supply and benefit whilst prices are higher.

Yes, time will tell and you may be right, but things aren't as black and white as you're making them out to be.