RE: partnership Hello Derek,
"The sense that I get from AXI is that the 5 million debenture was supposed to be temporary solution to getting money into AXI's hands quickly while working on final approval for the $20 million that we really should have received a long time ago. Now that XDIP is finding that they still have to create this subsidariary to forward the money then why wouldn't they just use the subsidiary to forward the original $20 million rather then just the $5 million. So it makes me wonder if XDIP is trying to put as little investment possible in order to a get a feasibility study."
That is a very good question, and perhaps one of the more difficult ones to answer.
But first let's remind ourselves that the Convertible Debenture is two fold......1) it provides XXP with their right to maintain 19% ownership in AXI stock, according to their original agreement and placement; and 2) to provide temporary funds for the completion of the FS. And with this being said, I really do not think XXP will be looking for repayment of this debenture loan, but taking stock in lieu of somewhere down the road.
But you're right, "whatever happened to the $20 million according to the framework agreement to advance and fund the FS throughout 2011"? We all have been puzzled about this since last spring, where we first started to look for these funds in AXI coffers. There was nothing that frustrated me this past year more, than the absence of these funds. It wasn't until the fall, when I had to come to the realization......without the help of company disclosure unfortunately :(......that the terms of the agreement, were reworked somehow, and that the FS funding would not come until later. So the announcement of the Debenture was a bit of a relief, but at the same time, a sore spot of mine. It was a relief, for I knew AXI would not be able to carry the FS costs themselves, and the $5 million would tie them over quite nicely. And a sore spot, for I/we still don't know what the new arrangement looks like, and our other projects suffered without this $20 million funding. Management has truly kept us in the dark over this and I make not excuses for them.
But what has kept me going is knowing that our partner XXP is stilling moving forward with the development of Roche Bay, through signs like the Debenture and now this new Hong Kong subsidiary. I take all of these fundamentals as small building blocks, towards the larger goal......inclusive of delays unfortunately. And seeing the other day the completion of ADI's deal with WISCO, after eight months of absolute silence, bodes well in my opinion, of how slow these State Owned Enterprises can move, but do come through!. :)
But with respect to the $20 million for the FS, I suspect......as you were alluded to in your conversation with Nadine some time back......that these funds, along with the future profits payment of $20 million, will come at the same time as the formalization of the JV corporation. Even ADI did not receive funds.....other than the initial private placement.....from WISCO until the JV corporation was in place. And yes, it appears that this is to XXP's benefit, for they will see the completed FS before all of this will take place. And like I stated above, the terms of the AXI/XXP agreement has changed, but perhaps for very good reason.
In an earlier post, I stated that XXP performed a PFS last year as part of their due diligence, and I have to assume that they have had these results for some time and were pleased with them, to keep them progressing to a mutually agreeable end......that of a JV. And I do not believe that these delays allow XXP to wriggle out of paying AXI the full $20 million for the FS, not matter what the final cost may be......should this JV move forward.
The bottom line is Derek, there are still some unknowns and risks, but everything is still pointing in the right direction.
Blessings,
Murray