my cynical view of the funding relationshipThanks to 4putt for relating the explanation of the new funding agreement - HRE changed its agreement from one where the funding was a loan and the funder got an additional percentage to one wheere the funder gets 3 or 4 times the amount funded (I am going to assume 4 times given how things have been disclosed in the past). We know the new funding agreement was reached when $7.5 million had already been advanced, so Stans starts out owing $30 million. Obviously, I am guessing but I would expect there to be another $7.5 million in fees before a final enforceable judgment is obtained - so that would be $60 million. I am also going to assume interest at 6% is being applied to the obligation, which is really 24%.
My issue is that the amount of the claim that is recoverable may not be as great as Stans is claiming. If the recovery is based upon what Stans has invested in Kyrgyzstan, then it could be less than $30 million in principal amount. Stans really did not spend that much money inside the country (probably less than $20 million), and even if you include overhead, etc., that number just is not that big. To get a larger judgment Stans would have to prove with some certainty that the deposiit had a larger value - the time and cost of extracting the REEs and their market value - while Stans can show some poitive metallurgical tests, not sure how convincing they can be of their ability to cost-effectively produce final product economically.. I think it is a little telling that this claim was asserted in the Moscow arbitration wich was an end around play to avoid the more accepted/fair process of UNICITRAL. There has been no disclosure of the pleadings ,etc., so I cannot express an opinion on how good the proof is of the $230 million or so they are claiming. I would just caution that the judgment (which I believe they are likely to receive) may not be of the magnitude that many on here expect.
From the funders point of view, if $15 million is relatively certain, they are playing with house money. From the companies' point of view, they are hoping that there will be something on top of the $50 or $60 million debt they are going to have to pay, so they can stay in business. I see the lithium play and now the shenium play as a continued employment opportunity for management that will only be available if they have significant funds to invest from the award. From the shareholder's standpoint, Stans probably has another $10 million in payables IIRC from when I last looked at their sedar filings. And the current management is set upon continuing Stans and pursuing these Russian mining opportunities. The shareholders are not going to see much in the way of a dividend unless Stans rings the bell inthe arbitration, gets a judgment for near the entire amount of their claim and then is able to recover that amount from the Kyrgy (some big ifs). So the shareholders have to hope for more than a $80 million award, five times what the funders need, before they have a real winner. If the award is less than $50 million or so, the company may just be bankrupt. The excess funds that Boris talked about could probably start at $130 million or so, I would be guessing. But knowing this management, there will never be any excess funds despite what management has said in the past (you didn't dream it yeribe).
Just my opinion based upon limited evidence, which has been negative of management since they told us that the CIS advisory opinion was a win for Stans. DYODD.