Camrova Resources Inc V.CAV.H

RE:Questions for Mining_Pays_my_bills

[mining_pays_my_bills]

Reggieman. Here's my honest opinions:

 
“Nobody is talking about the possibility that BAJA recover all or part of the lost percentage of the mine.”

• Not sure if you’re talking about the percentage beyond 10%, or the percentage to get back up to 10%. I don’t believe BAJ is going to try and increase their ownership beyond 10%. The 90/10 split was based on construction costs, there was a clear formula in place by which BAJ’s ownership was diluted by x% for every x$ over-run. It’s always cheapest to buy early because there’s more risk, you’re taking a gamble. If BAJ were to try and buy back after the mine is complete and in operation, there’s a guaranteed return on investment, and you pay a premium for that. They may have to pay KORES double what KORES paid for each % stake. Having only cashflow from this one operation, and only 10% at that, it’s gonna’ take them a long time to afford a greater stake in this mine. So, I think they’ll try to increase shareholder value another way- maybe some exploration, maybe purchasing royalties on another project in development, etc.
• If you’re talking about the % to get back up to 10%. That’s speculative right now. As far as public info is concerned we still own 10%. Until final costs are released and we know how much the over-runs were, we may be diluted down to 8, 7, 6,… % But, …. We might not.  

 
“MMB must provide a SRK report to BAJA, which will have 30 or 60 days to find funding. It's easier when the mine is ready to start?”

• SRK was a consulting firm hired by BAJ to prepare a mine plan for Boleo. There’s no such thing as an SRK report, per say, it’s a “resource report and mine plan”. This report would confirm how much proved and probable resource is there, and what the best way to go about mining it would be- it would outline if they should do retreat or advance mining, if they were doing room-and-pillar, how big the rooms would be, how much ore they should hoist to surface, how much they should stockpile, and process, in each month of production for the full mine life. It details at what rate they should ramp up production, etc…. Basically an instruction manual that tells them how to reach their production targets.  SRK never did provide an updated mine plan, they were subsequently let go by BAJ, and so no such report will be released. MMB is supposed to release one, and the idea is that they show it to lenders who are gonna’ love the good news and lend them the money they need to complete construction and normalize production. BAJ has already gone out for funding, as we know (they already got 50M$), but we haven’t heard anything about the MMB mine plan. My guess is it is in progress, the final draft has not been approved yet. Whether they got funding based on the mine plan, or just based on the fact that they have KORES as a backer, I don’t know. Doesn’t really matter to me. I care about the end result, not the journey, and we got what we wanted- funding.

 
“Possible split 20 to 1 share could not be brought forward in order financing?”

• In the last MD&A BAJ implied  that the overall cost of Boleo would include construction completion and the achievement of normalized, sustainable production (i.e: commissioning). Once this is achieved, they’ll take the final price, and whatever amount in excess of 1.75B$ would be used to calculate BAJ’s dilution (if they couldn’t provide their own funding). In the amount of 1% reduction in ownership for every 10M$ BAJ owed. In the case of a 100M$ overrun they would owe 10%, or 10M$. If they didn’t have 10M$ ownership would go down to 9% BAJ, 91% KORES, and so on. My gut feeling is that once they know they final cost (and it will be more than 1.75B$), and before they release it to the shareholders, they will do the 20:1 consolidation to bring the number of shares down to 17M. They will then offer new shares, maybe 10-15M shares at 1$ each. This will be used to pay their cash calls for the over-runs so that they can keep 10% of the mine…..Then BAJ management will exercise their 5 cent options and buy a bunch of 1$ shares for 5 cents each (I hope that last part isn’t true, but it could happen)

 
As for share price this week. I don’t think we’ll see a double. Actually I don’t think we’ll go past 6 cents. So many people own shares in the sub-5 cent range, there’s gonna be a lot of flipping the next few weeks. ‘But the NR said we’re going to be producing by end of the month! Why are people so impatient? Why sell at these levels?!” I know, but people will, it’s happened all year long. BAJ has been the darling of penny flippers.