Conversation with Phillipe GiaroJust had a phone conversation with Phillipe Giaro.
My reason for calling was related to a statement in the 2010 annual report and some meeting minutes that indicated Searchgold was going to have difficulty raising their portion of the capital to participate in the construction of the project. Anyways, Phillipe confirmed that this hasnt been figured out but the project development is continuing on schedule as Managem is financing the construction. They dont plan on raising the funds from shareholders/dilution for a couple reasons 1) they cant/low share price prevents them (
.05 rule) and 2) no desire to dilute company further. They are working on an NSR agreement with Managem. He didnt provide the details but it sounded like it was the only option. Selling off their positions in other companies would generate even close what is needed to pay their portion of the construction costs.
He mentioned a NR is immenent related to another one of the partnerships (SWALA i think).
He was a bit stand offish at first but we had a decent conversation about the direction of the company and the problems they face in terms of relying on partners to move projects forward and not being able to generate funds due ot low share price (nothing new but some good explanation beyond what I already knew). He answered his phone at what would have been 9:15pm. I wasnt left with a positive or negative impression.
If I was a betting man I would bet an NSR will be struck in the coming months. He seemed to really like that model of an NSR vs. % ownership or sell off. The good news is it will generate some guaranteed cash for SearchGold but the bad news is that the amount wont be anywhere near what some poster predictions have been. I am not sure what the amount and terms would be but I would guess a few percentage of NSR, which would account to maybe a million bucks a year over the life of the project (spare me the arguments I was just calculating some rough numbers in my head from what I could remember of the project with my NSR guess).
I may give him a call in a few weeks to see what is going on.
My main reason for posting is to inform the people on this forum that Searchgolds 27% is not solid due to their inability to contribute to the construction and it will likely become a much smaller stake in the form of an NSR before mining occurs. Until today I was unaware of this. I havnt decide if I am going to keep or sell my shares but will likely hold given the Gabon project is the first positive thing to occur for Searchgold in a long time and will like result in a pop in share price no matter what their involvment (just not as big of a pop as I would have liked).
Peter