RE: HOCHSCHILD IS MAJOR REASON I OWN THIS STOCKThis is good new for EXM. As pointed out, there are no warrants (and also no commissions) attached to this deal so it is not really expensive. Dilution is a way of life for junior mining companies. The key is what do you get in return?
This is a very strong statement in support of Karl and Dr Gibson. The fact that they are already well into the Moris JV and HOS is willing to step up and increase their equity position is very positive. So far, HOS has been willing to fund, through equity purchases, all EXM costs in the Moris JV. $2MM of these proceeds will go to the capital increases at Moris. The rest will be available for exploration. The posts on this board that compare EXM to MAI are very valid. Hochschild made the mistake of allowing McKwen to come in and buy up 30% of MAI at under $.50. They watched the stock run to over $2, as their work brought the San Jose Mine closer to production. Now MAI's cash needs and financings will be limited to new projects.
I believe HOS did not want to make the same mistake at Moris and with EXM. They clearly believe the mine will be bigger than advertised. They are now really figuring out the metalurgy of the ore and the geology of the properties. Once Moris is producing cash flow, EXM will have much greater flexibility with financings. Meanwhile, HOS has become comfortable with management and looked at the entire EXM portfolio. They have wisely opted for a right of first refusal on all JVs PROPOSED BY EXM. Meaning EXM can still go it alone on any project. But they will not. Karl has stated many times "we are not miners, we are explorers". Remember, Karl and Dr Gibson were both at MFN during the exploration of the Delores Property.
Those who want to see EXM "go it alone" and build a project to production are probably going to be disappointed. This is a multi-project company that will probably joint venture everything, at some point. The better projects, they will drill more holes themselves to strike a better deal. But they will eventually partner on everything. IMHO. Proven projects will likely get a 30% "free ride" to feasibility study and provide construction financing, which is kind of the industry standard.
Having a partner like Hochschild is every junior's dream. They have cash, they are in a growth mode, they are experienced at building mines and they are experienced at operating mines. This includes pit and underground mining, which is what Mexico is all about. They have the engineers and geologist on staff to evaluate projects, today. They understand metalurgy, which can be very complicated in Mexico. Finding ore is one thing, producing gold and silver from that ore is something else. I believe that any project that HOS enters into, they intend to mine.
This is not like most joint ventures on exploratin properties. Many of the deals that are being explored on a JV basis are one junior partnering with another junior. Many times this is just a matter of who has the money to drill, today. New companies are popping up all the time and signing JV deals so the Brokers have a "new name" to sell.
Very few of these deals involve the kind of resourses EXM will receive from Hochschild. The market is missing this. EXM now has an experienced major investor, with tons of cash, who is basically saying "here is the drilling money, drill your best projects, if you find gold and silver at any of your projects, we want to help you build and operate a mine". Suffice it to say,if they ended up as 70/30 partners with HOS on every project, EXM shareholders will be very wealthy.
And don't forget, EXM has another partner who fits the same mold in Penoles. Penoles just happens to be the largest silver producer in the world. They dont partner with just anyone, or on just any project. The insane opinions expressed through posts on this board that question EXM management are clearly not shared by two of the most active miners south of Laredo.