Ann: WAF Receives Strong Interest from Leading Debt Financiers, page-78

@Prisoner24601

I’m not sure that you can read that share dilution is absolutely of no concern from the last funding announcement update as it contained a range of offers from US$160m to US$215m.

The full pre-production capital cost from the latest study is $US185 million. I’d favour 100% debt funding but from a risk management perspective an equity component is like having a bit of insurance against exectution risks.

Take DCN for example, their recent CR is being sold as being motivated as part of an aggressive growth/exploration strategy but at the same time Mt Morgan is still in ramp-up and the cash can also be turned towards working capital should the ramp-up not run as smoothly as planned. You probably don’t want to go into a mine build with only debt on your balance sheet because your share price is going to be thrashed if you put your hand out for capital in the middle of a ramp-up, take GCY for example.

It’s also interesting to listen to the comments at the end of the B2Gold presentation when Clive Johnson speaks about the share price fall in his stock and catching the shorters off-side when building Fekola.

He basically said the market buys cashflow and it doesn’t care about development. That’s a very insightful comment because it’s true for the largest proportion of the market, ie the slavish institutions. Luckily some of us aren’t bound by this mantra so opportunities like WAF are buyable. Eventually when the cash flow comes the share price gets the rerating if this theory is bankable.

That’s also why I like RSG so much. From a cash flow perspective the September quarter of FY2019 will likely be the most squeezed quarter in the company’s recent history, so if investing in gold stocks is basically that simple, ie low cash flow equals low share price then you probably won’t ever get a better time to buy that company IMO.

If it really turns out to be that simple I’m going to be a very happy investor in 2 to 3 years time (all else being equal) on both of these companies.Esh