CVG Mining- It's amazing what a work out does for the grey matter. That is, in addition to clearing away the minor effects of excess quantities of Chardonnay!! I spent the whole time thinking this through so lets see if these ramblings makes sense. Please advise on errors and omissions.
Newsk, if it exercises its 2011 option, will own 48.5% and have established a NSR of in excess of 5%. Leonard Sinclair et al appear to own the balance. FNR has a $5.1 million loan outstanding as well and somewhere between $2 and $5m is still required for the last capex and working capital.
If I were part of FNR I'd be looking to increase our ownership way above the 50% mark if we have to fund this as well. Also how do we get our loan repaid? Should we invest even more money in this project? There's still masses of risk!! Well one way to resolve all of this would be to do anyother capital raising opportunity. In exchange for more shares FNR would eliminate its loan and provide the additional cash required but that doesn't resolve the increasing exposure/risk including too many eggs in one basket. Alternatively other investors including FNR existing shareholders could be offered the opportunity to make a direct investment.
Last year in the 2011 option FNR received 7.5% and a 1.25% SMR for providing $1,795,000 and then 1% and 0.2% NSR for each additional $200,000. Since $3.7 million was provided does that mean Newsk already owns over 50%? They seem to have been valuing the project at that time at around $20 million. If over 4/5years Wingdam generates $72 million in ptp then what would the project be worth now?
Well enough musings for one morning. All will be clarified in the next month or so. Looking forward to seeing how this plays out, particularly its impact on the FNR share price. Interesting times. GLTA.