Option Price At ExcersiseThe value of the option at exercise was established back in 2018 when the arrangement to absorb the Altumara was conceived. Oroco, at that time, was trading for $.26
A benchmark for the value needed to be determined, so it was ascertained to use the current market price to establish that. It's all explained in the sedar filing, of which part i copied here. To reiterate what Cal has been saying, these guys are so transparent, they're almost invisible!!!!
Related and Non-Arm’s Length Parties to the Transaction
The Option Agreement involves non-arm’s length parties pursuant to TSXV Policy 5.3. David Rose is one of the
Optionors and a senior officer of the Company. ATM Mining is also one of the Optionors and a company of which
Craig Dalziel, a director and senior officer of the Company, and David Rose, are directors. Accordingly, David Rose
and ATM Mining are both considered to be Non-Arm’s Length Parties to the Transaction pursuant to the policies of
the TSXV. As a result, the Company is required to provide evidence of value and disinterested shareholder approval
of the Transaction. A total of 9,930,750 Common Shares, representing 9.49% of the Company’s issued and
outstanding Common Shares held by the Non-Arm’s Length Parties, will be excluded from determining whether the
Transaction has been approved by the Shareholders. See “Interest of Certain Persons in Matters to be Acted Upon”.
The Option Agreement also involves related parties pursuant to Multilateral Instrument 61-101 Protection of
Minority Security Holders in Special Transactions (“MI 61-101”). As a senior officer of the Company and one of
the Optionors, David Rose is considered to be a related party of the Company. ATM Mining is also considered to be
a related party of the Company, as Craig Dalziel is a director and senior officer of the Company and a director of
ATM Mining, and his wife is the sole shareholder of ATM Mining.
The exemptions from the formal valuation and minority shareholder approval requirements of MI 61-101 are
available for the related party transaction pursuant to section 5.5(a) and section 5.7(1)(a) of MI 61-101 on the basis
that, at the time the Transaction was agreed to, neither the fair market value of the subject matter of the transaction,
nor the fair market value of the consideration for the transaction, insofar as it involves interested parties, exceeds 25
percent of the Company’s market capitalization. As at August 31, 2018, the Company had 89,147,405 Common
Shares issued and outstanding, with a market price of $0.26 per Common Share. The Company’s market
capitalization was therefore $23,178,325, 25% of which is $5,794,581. If the Company exercises the Option, David
Rose would receive consideration in the amount of $2,158,520, being 8,302,000 Common Shares at $0.26 per share,
and ATM Mining would receive consideration in the amount of $2,158,520, being 8,302,000 Common Shares at
$0.26 per share. In addition, if the Company exercises the Option it has agreed to pay certain fees previously agreed
to by Altamura, which are contingent upon the sale of Altamura’s interest in the Santo Tomas Concessions to a third
party (other than Oroco). The contingent fees include up to US$1,000,000 that would be payable to David Rose, an
officer of Oroco. Accordingly, the fair market value of the subject matter and of the consideration for the
Transaction, insofar as it involves interested parties, does not exceed 25 percent of the Company’s market
capitalization.
Recommendation of the Special Committee
In evaluating the Transaction, the Special Committee considered the benefits and risks of the proposed Transactio