Advanced Explorations Inc. ADEXF

Call Option

[Goldengreen]

This deal is just a cheap call option for Parkson. This isn't an Asian steelmaker, this is just a rich Chinese dude, who is picking up an asset on the cheap. To date AXI has spent roughly $67 million in property and exploration costs on Roche Bay and Tuktu, and owns 75% of the properties (Roche Bay plc still owns 25% and a massive royalty). Chinese dude is getting 80% of AXI's 75% stake in exchange for paying off the $13.3 million in debentures.

Chinese dude's strategy: pay off the debentures, become the majority owner, then wait for the iron ore market to pick up steam again. Then try to sell the project to a big Chinese steelmaker. This process could take a long time, likely until the next resources supercycle in 10 or 20 years.

AXI is just happy not to be terrorized by the constant quarterly cash calls from XinXing on the debentures and from Roche Bay plc on the $1 million annual rent payments. They've given away the majority of the project on the cheap, but now there's no fear of bankruptcy and they are free to raise money and move on to the next thing.

[barnhartban]

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[Shlinker_]

Good post GoldenGreen. I like those odds too. Risky investment, but i like th fact you even think this will fly someday. A monster retirement plan perhaps! Cheers.

[terarm]

Shlinker, I agree it's (still) a risky investment that now has some hope of flying one day, but it may be many years in coming as Goldengreen pointed out, as we will have to wait and see if Parkson will actively  advance the project, or merely keep it going until a buyer appears. Johnsonlycee suggested a possible valuation based on the npv which would sure be nice if and when it's

[Shlinker_]

Terarm. i cant see why the proposed jv wouldnt get shareholder approval. We could use this jv for sure. I wont be attending the meeting as i live in Alberta. i did vote for proposed jv of course.