Did Not Understand Some Parts Of Article
"Dippenaar stresses that, during construction, risk or equity funding will be GBG’s preferred financing route, as debt financing would inevitably result in hedging commitments. “Shareholders have not had the full value of their investment, and to hedge away the future upside is probably not the way to go,” says Dippenaar, who was part of the rabidly antihedging core while at Harmony. “We are on the realising-value curve as we begin developing the mine, so we do not want to dilute shareholders, especially since we don’t need the funding.”
I understand the undesirability of borrowing money from the banks, to fund projects. James Sinclair has explained how the banks, in order to guarantee repayment, require the companies to hedged/go short gold future contracts, for the amount of the loan. Then because of newer accounting rules, as gold move up, this shows up on the companies books as a loss. Sinclair has pointed out how this is a bad idea.
Dippenaar says at the bottom of the top paragraph that they "don't need the funding". So I don't understand why he then says they will use risk or equity funding. I am not sure what risk or equity funding is, unless it is to issue more shares. I don't understand what risk funding is, unless that is another word for issuing more shares. I think that is what he is actually saying.
By the phrase, "they don't need the funding", I guess he means they don't need to borrow from the banks, but will need to issue new shares of some type, like Preferred shares. So perhaps I have figured it out, after all.
To amarksp: I see you think that Preferred shares is a good idea. I know in the past you have not been in favor of increasing the number of shares. Perhaps though you are saying that since Preferred shares are different then the Common shares, they do not dilute, or the advantages overcome the disadvantages. It does look like however, if they want to issue Preferred shares, they will have to have another proxy meeting to vote on them.
