Inca One Resources (IO.V) has announced it will raise an additional C$600,000 by issuing new debt which will have a coupon of 20%, paid in quarterly installments and maturing in two years from now. The proceeds from the debt offering will be used to purchase high-grade ore from Peruvian miners to be treated at the Chala One plant.
The interest rate is a bit high (it’s twice the interest rate of the recently closed debt offering), but Inca One has the right to redeem the debt after six months and we hope the company will be able to redeem a majority of the debt within the year to reduce interest payments. It’s also important to note this new debt offering is straight debt and as such cannot be converted into new shares.
If Inca One can obtain the same operational margin as competitor Dynacor Gold Mines (DNG.TO), we expect the Chala operation to generate approximately $150,000 in monthly net revenues which will be used to repay debt and expand the company’s footprint in Peru.
> Click here to read the press release
Disclosure: The author holds a long position in Inca One Resources. Inca One is a sponsor of the website. Please see our disclaimer for current positions.
