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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers
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To: Anchan who wrote (9083)4/13/2006 9:58:38 AM
From: Julian Augustus  Read Replies (1) of 78427
 
I find this puzzling. In early 2005, the company needed $145m to build the mine. Fine. They raised a little over $80m in equity financing (which is when the A warrants were issued) and arranged a $75m debt financing which came with an associated hedge. When MDM went bust in January, they raised in March a little over $70m in new equity financing (issued B warrants). One would think EPM would have enough cash from the equity side alone to build the mine? Why do they need as much as another $70m or more in debt financing, and urgently?

And the terms of the toxic debt financing and associated hedges seem stupid beyond belief. The bank is going to lend you $75m, but meanwhile they are holding $20m of your money until they give you the $75m? Is the management just completely incompetent or am I missing something?
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