The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
omg
1. Up to the feasibility study the 15% costs that are Cornerstones will paid by Solgold - they will be repaid by Cornerstone out of the proceeds from production. So in actual fact Cornerstone will not need to raise money for that.
2. After delivery of the feasibility study Cornerstone MUST pay their way immediately OR they will lose some of the share in ENSA.
3.
KB007 and theiceberg - in back and white for you today - hopefully you both climb down of your high horses.
The junior equity owner in ENSA is required to repay 15% of costs since SolGold's earn in was completed, from 90% of its share of distribution of earnings or dividends from ENSA or the Cascabel concession. It is also required to contribute to development or be diluted, and if its interest falls below 10%, it shall reduce to a 0.5% NSR royalty which SolGold may acquire for US$3.5m.
KB007 "Can CGP maintain it's interest in SOLG above 10% (8.85% currently)"
The 10% is referring to Cornerstones holding in ENSA, which stands at 15% Solgold have surmised that this could reduce to below 10% if CGP need to raise finance to fund the cost between BFS and production. Read the offer and responses and you will see this discussed by SOLG, it is very clear. (It has nothing at all to do with CGP's share holding in SOLG.)
I am a little surprised to hear so many learned investors not understanding all this. However, SOLG's offer for Cornerstone was a mess. Can you fathom that SOLG didn't even realise the extent of the Cascabel license? They had to gift chunks of what they thought were their 100% licences to ENSA, now they will have to provide a BFS which covers those sub sections.
Thanks Mog, and this here http://www.cornerstoneresources.com/s/NewsReleases.asp?ReportID=571519
Not sure where you got your quote from, the exact wording is:
"If Cornerstone fails to fund its proportionate share of ongoing expenditures following completion of the BFS..."
i.e. ongoing costs after completion of BFS.
To be clear I am saying:
CGP pay their share of costs up to BFS with their share of earnings from production.
However after BFS and up to production CGP will have to pay their own way at the time .
The 'may' means - Cornerstone could elect to bail in which case Solgold will fund the lot and Cornerstone will simply get a smelter return or 1.7 million cash. But they will not get their 15% return.
It does not mean Solgold can demand the money up to BFS to be paid right away.
From BFS to production is another story, but up to BFS that point Cornerstone sitting pretty. Cornerstone several months after BFS to ponder what to do.
Really this is quite simple and well documented.
SolGold is funding 100% of the exploration at Cascabel and is the operator of the project. SolGold is entitled to receive 90% of Cornerstone's distribution of earnings or dividends from ENSA to which Cornerstone would otherwise be entitled until such time as the amounts so received equal the aggregate amount of expenditures incurred by SolGold that would have otherwise been payable by Cornerstone, plus interest thereon from the dates such expenditures were incurred at a rate per annum equal to LIBOR plus 2 per.