RE:Foolsexplman -
I think this is being taken totally out of concept. Saying they will or intend to exercise is different than saying they will exercise now which would mean paying the cash instead of carrying out the exploration phases. Phase I was for about $18.5 million so they haven’t spent more than that as I believe that will include processing samples over the winter. They are building the plant and will process the samples over the winter and forge ahead with Ph. 2 next year. This only states their intention to complete all four phases rather than doing one phase, commit and perform the second, then commit and perform the third, etc. They have stated that they don’t plan to stop after any one of those phases. They will earn their position as they complete each phase. The paragraph below states that they had to pay the approx. $75 million either way, in cash or perform the exploration. If they paid the cash, Star would have it to use on exploration themselves. The link to the news article at the bottom explains it more. It would be nice though to know what has been redacted.
[The company’s deal with Rio Tinto, meanwhile, is divided into four phases, each of which allows the global mining giant’s subsidiary to acquire a stake in the project in exchange for completing exploration and development work or making payments in lieu of those expenditures. If Rio Tinto chooses to complete all four phases, it will own 60 per cent of the project.]
[Rio Tinto is expected to continue taking samples and assembling a sample processing plant at the site 50 kilometres east of Prince Albert before, at some point in the future, deciding whether to take the project to a pre-feasibility study phase.
While the company’s commitment does not signal its intention to bring the project into production, a New York-based diamond industry analyst said Rio Tinto’s decision signals that is a “very, very realistic possibility.”]
https://panow.com/2019/11/15/rio-tinto-to-exercise-all-options-on-fort-a-la-corne-exploration/