RE: This sucker is coming DOWNNo I have not seen the LOI but I would like to. I am going off what I have been able to discern so far and what I have seen in the past. In the end it should be obvious to all that it is the opinion of a Bullboard poster and is therefore worth the price paid for it.
The typical problem with an LOI is enforcability. Do a quick Google on "letter of intent enforcability" and read a few of the articles. It is very clear that large questions come into play as to whether the best of these letters are enforcable or not. In the end it does boil down to the language of the letter, the performance of both parties in regard to requirements of the letter, and reason for termination of the agreement.
Here is a line from the NCR news release anouncing the agreement that gives me a little bit of a pause: "The parties to the agreement will enter into a formal option agreement to further set out the terms of the option." The reason this gives me pause is that it makes it very clear that the two comapies had not agreed to terms on the option of the property even though discussions serious enough to result in an LOI had taken place. What happens if the contentions that produced this clause cannot be worked out? A quick read of the law show that the property holder tends to be favored in such a dispute. Both parties are working at risk when performing work under an LOI.
Now here is a quote from the NCR release terminating the agreement: "Northern Continental Resources Inc. (the Company) has terminated the letter of intent dated November 27, 2003 with Roughrider Uranium Corp. with respect to the Company's interest in the Russell Lake uranium property in the Province of Saskatchewan. The Letter of Intent contemplated the parties would enter into a formal option agreement, but the Company was not able to resolve the terms of the proposed option agreement with Roughrider Uranium Corp. The Company has therefore advised Roughrider Uranium Corp. that all further negotiations under the letter of intent have ceased."
So they are pointing at the same issues that were alluded to in the first release. It would be reasonable to assume that these same points of contention were the reason a LOI was entered into versus a full blown contract. LOI's always incur additional legal expense and are NEVER as binding as a proper contract (that is not to say that they can't be found binding only that they come with an automatic strike of doubt against them due to their tentative nature).
Now, in all fairness these are the NCR releases and they can say anything they want. My problem is that I cannot find any information from the other side. With that said I have to take the information provided and cast the appropriate sketicism on it and see how it smells. Right now I see no glaring problems. There is certainly room for problems but none have been presented that I can find.