The Bigger Picture..... Using once again, our example of a Adriana [ADI], a Canadian iron ore junior negotiating a joint venture with a State Owned Enterprise [SOE] with Wisco……we can see that “patience” is the order of the day.
BUT…..
There is a vast difference between the two Joint Ventures and the approvals that need to take place. And that vast difference lies in the fact that we have “Feasibility Study” [FS] in the middle of it all. In the case of ADI and Wisco, now that their JV agreement is completed, their focus will be on continued drilling and moving into the FS stage sometime this year. When this is completed sometime in 2013, they…..both Wisco and ADI…..will then make a construction decision shortly thereafter and move to seek another round of Chinese State approval for construction financing. For the recently signed agreement states…..
“WISCO has agreed to use commercial best efforts to assist the JV company to obtain project financing for 70 per cent of the development costs required to achieve start of commercial production for the Lac Otelnuk project, the size and scope of which will be determined by a bankable feasibility study.”
The same applies to the Century JV deal. But in the case of AXI, with XDIP having completed a PFS and a soon to be released FS by AXI……construction financing becomes part of the equation, or part of the approval process that is taking place presently. For why would XDIP seek State approval for the $50 million JV funds, and then within a month or two upon completion of the FS……go through the entire process again and seek construction financing?
When I look back at ADI’s “Memorandum of Understanding” [MOU] in Jan of 2011, they stated that their JV should be executed in 60 days. But we all know that even with a more simplified “agreement”…..not including construction financing……it took a full twelve months to complete. AXI’s MOU was signed in Sept of 2010, so considering the extra complexity of our fundamentals……the timelines seem reasonable.
It is my humble opinion, that when we hear of any financing approval from our strategic partner, it will include, not only the $20 million, or the $30 million draws, but the entire construction financing.
Blessings,
Murray