RE: News reaction + questionsHi Bru!
You have raised some good questions, but my interpretation is perhaps more bullish than yours. The comment from Karl Boltz is as follows:
"Hochschild will have first opportunity to make an offer on any of
EXMIN's twenty-plus available projects." - ENDQUOTE
Now to me that means that EXM has granted Hothschild preferential treatment when they choose to consider a JV for a project. It does not obligate EXM to do business with Hothschild, nor does it specify the terms of any JV deal. It simply means that Hothschild gets the rights of first refusal on any deal that is tendered.
So for Reyna de Oro for example, where no JV is being contemplated, it will remain wholly controlled by EXM. However perhaps at Horcon, where EXM is definately looking for a partner if the right terms were offerred, Hothschild may decide to step up and make that the next partnership project.
I think this is fantastic for EXM. Hothschild is widely respected within the industry and for them to make such a broad endorsement of EXM will definately get the attention of others. Hello, AEM, are you out there... Hey, Penoles, better step up to the plate and get busy with aggressive terms before Hothschild locks up the rest of the available projects... And so on.
The fact is that EXM is a project developer. We do not have the in-house capability to advance the projects to production. By negotiating JV deals we can realize the greatest value for the projects without becoming financially devestated by the costs. Just consider how much the cost to put Moris back into production. And we are only in for 30% of that, and most of the infrastructure was already in place. Yet it still took a very nice gesture by Hothschild to bail us out of a tight financial corner.
As long as EXM can continue to grab control of projects very cheaply, and then parcel them out to JV partners to generate value with the funding supplied by another party, I am happy as hell with the business model. And to get one mine running, and perhaps a few more in the future is the best case scenario as far as I am concerned.
Congratulations to Boltz and Gibson for having the management strength to get this deal done.
cheers!
COACH247