EAR does not need a lot of capital to crank this all up. They already have some cash and a modest equity raising along with some debt should be fine. The resource is over 2g/t and this is the same sort of ore that was originally put through the plant. The plant is basically there and had an operationally history, its not like we are starting from scratch. That provides a lot more comfort from a ground up operation. The expected refurb cost is somewhere around $20m-$25m from a previous announcement but the BFS will explain all that.
Lets say EAR has about $9m in cash on hand now and raises $25m in debt and another $10m in a placement.
That would give them a ratio of around half debt and half equity and $44m to build, operate and drill. That is plenty of leg room imo for a project like this. They own 100%, its higher grade than normal, the plant is 90% ready, exploration upside remains, met work is the same,no sov risk, management and a quick pay back period. They could pay that sort of debt off within the first 12 months if they wanted. They have also increased their resource status and confidence to over 1m ounces and that will only grow. This plant wont be running at 4mtpa, but at a manageable rate and feeding ore to that wont be a problem as a lot of this is open pit mining. The plant can be scaled right up if they find another big deposit. Can they toll treat? I guess so, but you would not bother with that until they slam a lot of their own higher grade ore through first. It maybe that other companies might want the access to the plant for serious tonnage and that might explain why NST is taking this seriously. I dont know what they may or may not do, but they are making discoveries along strike. Building a plant of this scale is very expensive and EAR doesn't have to worry about the license or the build cost.The gold price is still over A$1700 regardless of the recent drop because our dollar has fallen hard with it.
These are my own opinions and numbers so please dyor
EAR Price at posting:
23.5¢ Sentiment: Buy Disclosure: Held
