Blueprint of JVIt seems pretty clear to me that Tom has been given the go ahead for a $15.5 to $17 million budget for 2017 and to announce that to the world.
As for a JV...pretty easy to take the previous De beers option and just re-hash and change the De Beers - company X.
Here is the original option:
Should De Beers decide to exercise the Option, Peregrine and De Beers have agreed on the material terms of the Joint Venture which will include the following:
- De Beers is required to invest $58.5 million into Chidliak to earn a 50.1% interest in the Project, with a minimum work commitment of $37 million.
- De Beers is to finance all work at Chidliak from when they enter into the Joint Venture until the completion of the BFS, inclusive of appropriate environmental impact studies necessary for evaluating the feasibility of commercial diamond production. De Beers will use commercially reasonable efforts to deliver the BFS in a timely manner, subject to force majeure provisions.
- Peregrine is to reimburse De Beers 49.9% of all Chidliak costs in excess of $58.5 million, the point at which De Beers has earned its 50.1% interest, to completion of the BFS. Reimbursement will consist of an aggregate of $25 million payable in four escalating staged payments at certain milestones beginning with the approval by the participants of the completed BFS and ending with the completion of mine construction, with the balance payable from 66% of Peregrine’s attributable after tax cash flow from a diamond mine at Chidliak.
- Should De Beers decide to exit the Joint Venture prior to completion of the BFS, Peregrine can purchase De Beers’ unencumbered earned interest in Chidliak for De Beers’ expenditures on the Project, less $20 million, under a payment schedule similar to that outlined above.
- Both De Beers and Peregrine hold mutual pre-emptive rights over the sale of any interest in Chidliak.
- Following De Beers’ earn-in, annual work programs and budgets will require unanimous approval of the participants.
- Each participant is to retain diamond marketing rights for their respective share of production.
The Joint Venture will be governed by a management committee comprised of equal representation from each of De Beers and Peregrine, with De Beers having the right to appoint a chairman. Each party’s voting rights will be in proportion to their respective ownership in the Project. From commencement of the Joint Venture until completing their earn-in, De Beers will have 50.1% of the voting rights.
If either Peregrine or De Beers does not wish to proceed with a work program to construct a mine at Chidliak in accordance with the BFS, either participant may propose a plan and budget in respect thereof and the other party has the opportunity to participate, exit or dilute."
When Tom talks about $50 to $75 million to get to where they want to get to...I'm sure that number and budgets over the next few years has already been discussed in detail with any potential JV partner.
I'm sure the staged payment technique would be incorporated into any new JV.
LONG...PGD
EKIM