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Additionally, GGP had low grades initially hence why Newmont walked, but their grades built up over time
OMI has fantastic gold grades and over 200 square km and long strike lengths and I'm confident in them just as much as I was with SOLG
I hold a chunk of GGP and I see better grades with OMI ... if you recall Newmont walked away from GGP and in turn invested in OMI on the premise their debt was handled which was resolved and the Anza grades being better..
Newmont hasn't walked from OMI and as such it speaks volumes
OMI has just completed their stage 1 funding from Newmont.
Newmont has committed to spending a further $4m to progress the Anza prospect which apparently has greater grade expectations than GGP.
Steal at the moment if compared to GGP with a Market Cap of only £11m and 160m shares in issue, has rallied recently from lows of 2p
DYOR
DD12
It is a possibility but will the likes of Franco-Nevada offer a NSR on such a low holding of 15% ??? Doubt it very much.
Are CGP shareholders going to be happy with a massive cash raise and dilution to the company ??? Doubt it very much.
Sticky position for CGP which beggars belief why they are against the TO !!
Still, bad management make bad decisions.
FTNY,
When the deal was signed by Alan Martin I was ****-a-hoop!
CGP have already sold SOLG shares to fund their company. Their is a huge reliance on their part on the Cascabel tenement and they will not have any income from that until such times as a mine is up and producing. It can take about 2 - 4 years from BFS to get the mine up and running.
The question is can CGP afford to jointly share the costs after feasibility - a truthful answer would be no !
Can they afford billions of $'s in getting the mine to production in order to recoup. No!
AS CGP took the financing option their ENSA responsibilities are separate as this subsidiary is run by Ecuador and as such ENSA is the legal and beneficial owner of the tenement - (Term sheet 5.1 (a) 5)
SOLG issued stock to CGP in acquiring 85% of the ENSA and the sale of the other 15% would be determined by ENSA alone, not CGP, and in turn SOLG would have that first right of refusal.
CGP has their own subsidiary CESA for the La Encrucijada part of the joint ownership with SOLG and in turn SOLG would have no rights in how CGP determined any sale or takeover of the CESA.
CESA has been afforded the 15% holding in ENSA on behalf of CGP and if the 15% holding dilutes below 10% then the stake in ENSA will be diluted to a 0.5% NSR which will mean that CESA has no equity stake in ENSA and SOLG will have the right to purchase the NSR for $3.5m.
All these points are in the term sheet signed 24 Feb 2014 and filed on SEDAR in July 2017.
I would suggest the knowledgable ones check it out and that way they can maybe correct me should I be wrong.
However I feel my interpretation is correct.
Schlemiel !
You'll note that SOLG states on their presentation the first refusal of ENSA as well as it being stated in many RNS's over the past years. The Term sheet on SEDAR also states (in clause 3 (b) 5) "SOLG shall be granted first right of refusal of the remaining holding of Cornerstone in ENSA)" that is verbatim !!
Further in the term sheet states (clause 3 (c) 2 & 3) summarised
2 - "On completion of feasibility operations shall be jointly funded going forward. If any party fails to fund it's proportionate share when due it's equity in ENSA shall be diluted down by way of transfer to the other party. CGP has 120 days after feasibility to review and let SOLG know in writing whether it jointly wants to fund it's share of the costs. If CGP has not decided within the 120 days CGP will be deemed not to be funding and if CGP elects to fund going forward they will pay the costs from the date of feasibility"
3 - "SOLG shall receive 90% of CGP's distribution of ENSA funds until CGP has fully paid the costs of exploration back to SOLG at a rate of LIBOR plus 2%"
What that means to me is that CGP will have to incur shared costs after feasibility until the production stage before they receive any income and additionally cannot repay their financing option costs until a mine is up and running. Can they afford to do that - I don't think so !
IMHO
SOLG will be able to raise CAPEX through NSR's or streaming finance via Franco - Nevada now that the business relationship is up and running. I agree with Miagi that CGP will struggle to raise the financing for the share of costs moving forward after feasibility out with being taken out however in the event of a TO of CGP the ENSA part of the agreement is non transferable and as a double blow to CGP SOLG has first right of refusal on ENSA as CGP chose the financing option for SOLG to carry the costs.