GREY:AXXDF - Post by User
Comment by
greenandgoldon Sep 26, 2011 11:24am
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Post# 19083954
RE: What is the value of Rose Central to Alderon?
RE: What is the value of Rose Central to Alderon?"If no buyout were to occur, and Alderon finds a JV partner, I'd imagine that they would strike a comparable deal to what other juniors have received in the Lab Trough. Using NML as a proxy, I'd think that Alderon would get a 20% free equity carry . . ."
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This is a really crucial mistake. The only other junior Alderon should be compared to is the former Consolidated Thompson. Their Chinese deal was $240 million in exchange for 20% of CLM's shares and 25% of the Bloom Lake joint venture. ADV's Kami is a better project than CLM's Bloom Lake (better iron ore grades, better location to infrastructure).
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Of course ADV is not as far along as CLM was so they won't receive as good a deal, but's that's the model. When the markets stabilize ADV will sign an offtake deal with a Chinese steelmaker: 25% to 30% of Kami sold for $100 to $120 million upfront, something close to those numbers.
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I dislike those minority equity carry deals because the junior carried company is subject to the whims, economic condition and development schedule of the senior partner.