Duluth Metals Ltd DULMF

Barclay's Review

[mayorkgh]

This is probably better news than the alternative i.e. no news and endless speculation in anticipation of the PFS. The Participation Agreement called for Anto to exercice its 25% option at 1X the 10% NAV, which always seemed a bit too good to be true. That option having been relinquished, the PA moves to the 40/60 phase i.e. from disproportionate (65/35) to proportionate (40/60) funding of capital costs. The PA also specifies that any shortfall by one of the members can be made up by the other member, resulting in a reduction in the deficient member's ownership interest in TMM. Anto could therefore increase its 40% share by simply covering DM's shortfall, if there is one, and diluting DM's interest from the current level.  Anto has probably decided that their Chilean development stream will keep them going for a while and that paying a premium price for TMM doesn't make sense if they can acquire it for a lesser amount. What that means for DM shareholders is that either the PA has to be renegotiated or another miner has to be convinced to take a controlling stake for less than the 1X 10%NAV that Anto would have had to pay or DM allows its interest in TMM to be diluted away. One would have to think that some permutation of the first two is the most likely outcome.