I am just reviewing the Annual Accounts for PAZ and am quite concerned at their debt levels.

I also note that finance costs (Note 3c) states that net finance costs are $520,679. But a further dig reveals this gem: "Interest costs that are directly attributable to the acquisition of property, plant and
equipment have been capitalised at an average interest rate of 4.2% (2021: 3.3%)".

I guess the auditors allow this but this looks like creative accounting to me. (Can some bean counter explain the rationale of this?)

Capitalised interest is $721,826, so the total interest bill comes to a rather large $1,201,752 which does take the gloss off the result somwhat.

I understand operational cash flows are strong but I feel the company could be in trouble if interest rates continue to climb, sales diminish somewhat.

Happy to be proven wrong.

On the debt side:
Bank Overdraft $5,132,170 ($920,048)
Current Borrowings $3,174,014 ($2,298,960)
Non-Current Borrowings $21,145,790 ($17,283,122)

That's total debt of $29,451,974