RE: Lagoa Salgada7 Jul 2021 10:23
The sale was sanctioned by one of the state secretaries, and EDM backpedalled in 2018. The 15 per cent stake stayed with EDM. The sale was even published in the 2017 annual report of EDM. EDM holds the stake as a carried interest = they have not to invest in the current exploration work. When Redcorp has a feasibility study (FS), EDM can dispose of the stake. Otherwise, I assume they would turn to be a partner of the project and have to pay up for all costs arising after the FS is done.
Therefore Redcorp owns 85 per cent of LS, and Ascendant can acquire up to 80 per cent of the LS project = MAFL will hold in the worst case only 5 per cent of LS. But when Ascendant fulfils its targets to increase its stake from 50 to 80 per cent, a feasibility study has to be prepared.
MAFL will have the option to renegotiate the repurchase of the stake with EDM. Indeed, there will be a specific value for the project if it would go into construction/production. But the price will include a lot of components of past work/expenditures that will reduce the price tag.
From today’s valuation point, the option agreement foresees another payment in June 2022 of one million US$ to give Ascendant 50 per cent of the LS project. Just six months later, another payment of 2.5 million US$ is due, including the feasibility study (FS) moving Ascendant to 80 per cent of the LS project.
I don’t know how expensive is a FS, but Ascendant has to invest more money till next June into exploration. If they want to reach a valid FS, they need to drill a lot from now on to increase the resource base to make LS economical.
Today Ascendant has 95.9 million shares outstanding and 21.3 million options outstanding (many at 0.30 c$ from the previous financing). The market cap is 23.5 million c$ for the current 25 per cent stake in LS and paying up all the above – £ 13.7 million = a 5 per cent stake = 680’000 £, just on today’s values.
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