RE: 23.35%Vette and Others – Mrigs has a point. I think some clarification is necessary if Teck triggers the earn-back feature BEFORE the Positive Bankable Feasibility Study is completed.
If the Positive Bankable Feasibility Study is completed, then it is clear that Copper Fox gets Teck’s 78% of Laird Copper Mines’ 30% of net proceeds royalty. Effectively, that will give Copper Fox 70% + 23.4% = 93.4% ownership of the Shaft Creek Project. Assuming Teck opts in during the subsequent 120 day period with the 75% earn-in option(the only reasonable scenario), then Copper Fox will be left with .25*93.4% = 23.4%(17.5% direct and 5.9% indirect).
But it is not clear what happens if Teck opts to earn back before the Positive Bankable Feasibility Study is completed.
For example, in reply to Mrigs, Vette cited the following which appears to be a quote from somewhere:
“ The Teck back-in option allows them to acquire up to a 75%interest in the Direct Interest (70%) and a (23.4%) interest in the indirect.I.E. Thus Teck would acquire 70.5% and CUU 23.35%.”
If I read the the above quote lterally, then 75% of 70% is 52.5%. Teck already has a 23.4% indirect interest which means that their total interest will be 52.5%+23.4% = 75.9% (not 70.5%) Other owners of Laird Copper Mines own 6.6%leaving CUU with only 100%-(75.9%+6.6%) = 17.5%. That’s how I read the quote!
As well, the effect of an early earn-in is unclear. Does this nullify or trigger the 23.4%indirect interest of Teck that goes to Copper Fox on completion of the Positive Bankable Feasibility Study? If it nullifies that provision, then Copper Fox would end up with only .25x70%=17.5%.
I have read CUU’s website and other sources, but the answer to an early opt-in is not clear. I hope it triggers the 23.4% that goes to CUU.
Regarding
one other matter, Teck has four options upon completion of the Bankable Feasibility Study. a. exercise its earn-back option (20%, 40%, or 75% by incurring 100%, 300% or 400% of CUU expenditures)
b. retain a 1% net smelter return royalty,
c. receive shares of Copper Fox to a value of $1,000,000
d. do nothing.
I do not think that options (c) and (d) or (a) with 20% or 40% make sense for Teck. But is there a possibility that a 1% net smelter return is better than 75%?