Post by
AnthonyMilewski on Dec 31, 2020 12:42pm
answering a few questions
We have had a few questions from retail shareholders (a few of who were formerly Highland Pacific shareholders) on our asset dispositions in 2020 and how they impact the balance sheet. It is important to note that Conic Metals in not an exploration company. We do not have the skills nor the desire to explore for minerals using Conic’s balance sheet. Exploration assets require time and money to maintain – even if you are not actually conducting exploration activities. In order to rationalize expenses and focus on the company’s core JV, streaming and royalty assets, we disposed of all non-core assets. In 2020, that included two properties: 1) Star Mountain; 2) Sewa Bay; and 3) Giga Metals equity position (retaining a royalty). In the case of Star Mountain we received a 1.0% NSR royalty and in the case of Sewa Bay we received a royalty of up to 5.0% GRR on ore sales. As or maybe more important than the consideration received for the disposition of the non-core exploration assets, was the elimination of approximately US$350,000 of annual burn associated with those assets. Management believes that a key re-rating milestone for the company is paying down the first tranche of its Ramu JV loan thereby becoming cash flow positive and opening up the potential for a dividend or share buyback. As we highlighted in our annual letter, at current nickel prices we are on track to repay this first tranche of debt in 2021. By adding cash and royalties to the balance sheet and further reducing the company’s burn rate from the disposition of non-core exploration assets we can help to ensure no dilution ahead of what we believe will be an important re-rate and milestone.