RE: RE: RE: RE: HRG Value $4? (Comp : OAO Polymeta
- release third party investments (passing Royal Gold test) ==> imminent
Hi bart_dc,
I know that most posters view the pledge release situation as passing the completion tests will release the $81M strategic investments. However, my interpretation of the Feb. 4th Royal Gold document has always been different from what most posters have posted on this bullboard.
My understanding is that passing of the completion tests will release the Taparko Mine (Somita pledge) and Bissa (High River West Africa pledge). This is still very significant as the true (non-suppressed) value of these 2 assets is in the hundreds of millions of dollars.
However, the successful completely tests will not free up our $81M strategic investments immediately, unfortunately. ``The pledge of High River's equity investments will remain in effect until the satisfaction of certain requirements as provided in the construction contract between Somita and its construction contractor.`` It`s not clear what those requirements in the construction contract are. I`m hoping that the extra mill being put in place at Taparko will be sufficient to address what ever requirements are in the construction contract (although, I have absolutely no idea). If it does satisfy the requirement then maybe we can also get access to our $81M strategic investments, FINALLY!
One other important factor to consider is the current carrying value of Royal Gold`s royalty interest in Taparko - it was only $15.3M at the end of 2009. Almost 6 months (2 quarters) have gone by since then. The balance owning should be even much lower now. Even if they don`t complete the tests in the near future, the quarterly payments by HRG will eventually widdle down the balance owing to nothing or virtually nothing. We are now generating production out of Taparko in the 120,000 to 130,000 annualized production rate - at that rate, it shouldn`t take too much longer to eliminate all commitments to Royal Gold (and the worst deal in the history of mankind, thanks Whalen, thanks Mosher (they can offer a course on how to destroy what was once the most promising gold junior/mid-tier company in the entire world, more promising back then than even Eldorado Gold (now $10 billion market cap) and Red Back Mining (now $7 billion market cap), they can also offer a bonus course of how to attempt to steal the most promising silver property on the entire planet from your own shareholders, in the middle of the highest silver prices in history).
Here is a part of the Royal Gold Feb. 4th document:
``Production has improved at Taparko such that High River has notified the Company that Somita is attempting to satisfy the Completion Test, as defined in the Funding Agreement. The Completion Test commenced on December 1, 2009 and will continue for 90 days.``
``As security for the Company's investment in Somita, two of High River's subsidiaries have pledged their equity interests in
Somita and
High River (West Africa) Ltd., the corporate parent of Somita. This pledge will remain in effect until certain production and performance standards have been attained at the Taparko mine, sufficient to satisfy the
Completion Test. Thereafter, if Somita satisfies the requirements of the Completion Test, the pledge of the equity interests in Somita and its corporate parent (High River (West Africa) Ltd.) will terminate and this security will be released. ``
``In addition, Royal Gold obtained as collateral a pledge of shares of certain equity investments in public companies held by High River. The market value of the pledged shares is approximately $59.5 million as of December 31, 2009. The Company's carrying value of its royalty interests at Taparko was approximately $15.3 million as of December 31, 2009. The pledge of High River's equity investments will remain in effect until the satisfaction of certain requirements as provided in the construction contract between Somita and its construction contractor.``