Donner stream Donner has the right until ~July 2012 to purchase 50% of the stream back for a cash payment of $14.0 M. SND originally invested $20.0 M for approx. 3.5 million lb's of copper purchased at
.80 annually. If Donner repurchases 50% we get a 40% premium on our initial investment. Frankly for the risk we assume I don't think it's enough, that is just under a 20% annualized ROR. This actually frustrates me as much if not more than the RDA deal, the RDA went sour because RDA management screwed up, I am not upset at Nolan because the deal looked good on paper, and you have to take risks in this businses.
Donner is a different story. I don't like their option to repurchase the stream. We took a chance on them and prevented some pretty serious dilution, and now they have the option to repurchase a chunk of the stream. And it looks like that is what they are planning to do after raising $15.0 M. $1.0 M for working capital purposes, $14.0 M to repurchase the stream, and then they are generating positive cash flow in 2013 and can finance their own exploration projects.
Anyway, fingers crossed they don't repurchase the stream, but it seems inevitable at this point. Given that this is a near term cash flowing stream I see this as a negative for the SP (yes yes I know Nolan can turn around and reinvest the $14.0 M in another deal, but good deals with juniors that are partnered with billion dollar international mining companies don't just pop up every day).