Transaction points of interest First off I apologize if formatting ends up a mess when I post, grab some popcorn everyone!
I can understand people having the idea that the past years drill potential was not fully utilized but I believe a lot of Cynthia’s time was devoted to finding the most strategic spots to drill for the best results. You don’t waste time drilling until you’ve found the best targets, that can be a costly mistake for juniors - drilling with the hopes of getting hitting a “strike area”. Every meter costs money, it needs to be used wisely. Everything costs more nowadays Cynthia is budgeting and planning for the future. Cynthia spent a lot of time scraping around in the dirt and the mud and I don’t think she as the CEO would do that unless she had a very good reason for it, it’s also the reason drill results in the past have always been “strikes” and not misses. She knows what she’s looking for and only drills in strategic locations.
Someone posted “nobody at the top is motivated to sell this business.” I couldn’t disagree with this statement more. As for Cynthia it’s a tough life being away from family. I’m sure Roger is just as excited for the time her swan song is realized. I know people get mad at some of the things people have said regarding this year being the realization of Cynthias swan song but nobody has a crystal ball (that works with absolute accuracy anyway, shots fired corky) so I believe that when these statements are made it is with hopeful optomism, not an intend to mislead or any effort to give false information.
I’m still hopeful a deal will be announced this year BUT IF NOT I am personally prepared (and everyone else should be) for that as well, to wait patiently until such a time as a deal does come together. A deal is obviously something they are focused on and working towards as best they can (more on that to follow). I am happy to wait knowing this will pay off eventually. Cynthia won’t be a sucker and sell for less than LME is worth so she’ll stay in the saddle as long she needs to. With that said the special committee and uscg engagement were not put in place by accident or without strong consideration. She is highly motivated to sell and is working towards that goal but you have to accept that there’s only so much she can do. It’s not like there’s a line around the block of buyers with billions of cash sitting around. these deals are never simple.
1. Noteworthy Transactional milestones:
Date unknown- a transaction or offer was made in the past at a premium to the 0.40 cent range and did not reach the stage where it merited special committee or financial advisor engagement. This is confirmed by a previous release version of the Faq sheet.
Special Committee -On June 14, 2023, LAURION established a special committee for the purpose of exploring opportunities and potential transactions that may be strategically beneficial to the corporation and its stakeholders.
Financial Advisory Engagement - On August 24, 2023, LAURION announced that it has paid a financial advisory fee to U.S. Capital Global Partners LLC “US Capital Global” in the amount of $250,000 (U.S.). On August 23, 2023, LAURION agreed to pay the financial advisory fee to U.S. Capital Global, with the expectation that this will assist LAURION and its recently formed special committee with continuing to explore opportunities and potential transactions that may be strategically beneficial to LAURION and its stakeholders.
2. Potential Delays: It has been some time since these events took place when compared with case studies documented by ahsineeg but i wouldn’t give up hope that this deal is still in the works just yet.I can’t say for sure that these are factors at play but I want to shed light on the idea that this transaction is immensely complex even if it is considered by some to be “simple” compared to other merger and acquisition transactions.
2a -The final agreed upon Price and MRE/Mira Geosciences 3d modelling
- I don’t think this would be a major factor at this point in the game as these are things that would have been addressed and looked into to some degree prior to formation of the special committee and engagement of USCG. Surely the buyer would have had their own team who looked at the LME data room to draw their own conclusions on resources and validate numbers. Maybe price has not been finalized to an exact figure but ballpark conversations and agreements would have had to be in place. It is possible the buyer decided they want a better deal, in turn delaying things and creating this idea that an attempt was made to bully LME into a deal.
2b - The buyer(s)
- In my opinion a joint venture between metals house along with another party (private equity firm or a family office) are on the other side of the table. That would mean laurion is not dealing with simply one other party but two, this could make negotiations more complex.
-Buyers acquiring LME would need to be approved by he government for the acquisition and the transaction itself would also be subject to approvals, this could also take considerable time especially for companies that operate in multiple countries who would be drawing funds from their operations in those countries to complete a transaction of this magnitude.
2c - Royalty interests of others on the Ishkoday:
- A third party holds a 2% Net Smelter Return royalty on LAURION’s 100%-owned 4 mining leases in Elmhirst Township (the Jubilee leases). LAURION retains an option to reduce the royalty to 1% at any time upon making a payment of $1,000,000 to the royalty holder.
- A third party holds a 3% Net Smelter Return royalty on LAURION’s 100%-owned Beaurox mining lease. LAURION retains the option to purchase 1.5% of the royalty for $1,500,000 or 1% of the royalty for $1,000,000.
- A third party holds a 1% Net Smelter Return royalty on gold and base metal production on LAURION’s 100%-owned Twin Falls mining claims. LAURION retains the exclusive and irrevocable right and option to purchase, at any time, 0.5% of the Net Smelter Return royalty for $500,000.
Royalty interests of laurion on other properties:
DAVIDSON-TISDALE AND NORTH TISDALE
As part of the consideration for LAURION selling its interest in Davidson-Tisdale and North Tisdale in 2010, LAURION received and continues to hold a 2% net smelter royalty payable on commercial production from certain mineral rights known as the North Tisdale.
MIDLOTHIAN AND DOON
LAURION owns a 30% joint venture interest in the Midlothian nickel property. The property consists of 11 claims (152 claim units) covering 2,520 hectares; it is located 80 km west-southwest of Kirkland Lake and 25 km west-southwest of the Town of Matachewan. The adjacent Doon property comprises of 1,721 hectares. Doon is subject to the following:
a) Net Smelter Return royalty of 2% covering 333 hectares, which can be reduced to 1% by making a
payment of $1,500,000 plus a $1,500,000 commercial payment; and
b) Net Smelter Return royalty of 2% covering 1,388 hectares which can be reduced to 1% by making a payment of $1,500,000 and commercial payment of $1,500,000.
Questions/concerns pertaining to royalty interests that could delay a transaction include:
- In relation to the Ishkoday rights held by a third party: Is it the same third party that holds all the royalty interests on the Ishkoday? Are there any covenants in place that could cause problematic or create a legal situation that would need to be carefully navigated in order for a transaction of LME as a whole to be completed?
- Are the royalty interests transferable and would the acquirer(s) of LME need/want to purchase those interests from the owners of said interests?
-What (if any) first rights of refusal are in place on the sale or transfer of the royalty interests?
All of these things (and presumably much more in regards to property rights) would need to be addressed by the appropriate legal teams and dealt with.
2d - Other possible factors:
- Metals House a 'right of first refusal' to the 190,000 tonne surface stockpile (the "Surface Stockpile") located on LAURION's wholly-owned Ishkoday property (the "Ishkoday Project") situated 220 kilometres northeast of Thunder Bay, Ontario. Obviously if a transaction were to occur and metals house was not a part of the buying party some type of a deal would need to be put in place here.
-Cash. It has been said many times LME would be a cash deal. IT is possible getting all the financing together in cash may be proving to be problematic for one reason or another.
- the buyer may only want the ishkoday and not the other "parts" of Lme. This could be a pint of difficulty to navigate which could also potentially hold up the deal.
Regardless of what is taking so long We have the easiest part in all of this, buy shares and wait. That’s it. When it comes to investing juniors true shareholder value isn’t fully realized until a buyout, that’s the way juniors are. This isn’t some long term dividend stock you buy into and hold for life, it’s also not a company that will give you a constant uptick in share price because revenues keep going up and their product line keeps expanding… you can’t compare junior mining to other sectors when your looking for true shareholder value and returns, they don’t work the same way.
3- looking forward
Cynthia and the rest of the team are doing all kinds of heavy lifting to put everything in place that needs to be. Without their effort and hard work there is no deal.
I’m not sure if Roger and Cynthia keep up with stock house still, I know in the past they have, maybe that changed with Steve coming on board but do we really need the posts dragging their names through the mud? It’s toxic at best. I’d like for the heads of Lme to have their attention and time focused on progressing the company not having to have some of the poison that’s occasionally posted on this board in the backs of their minds all the time. Yes they are accountable to shareholders but we also need to accept that there is a lot more to their roles than we give them credit for, i fully believe they are doing their best.
When investing the key to a smart investment, the other fundamentals are all secondary, if there isn’t a good management team in place the company will not succeed. If you don’t have faith in Cynthia and the team then maybe Lme isn’t for you, I for one, have the utmost confidence in leadership and I am sure that true shareholder value will be realized when the time is optimal. They’ve already fought off one hostile takeover and with the large friends and family ownership and continued investment from the group that took place in recent PP it is safe to say when there is a change of leadership it will be because of a sale not anything else. The majority of shareholders still have confidence in those at “the top”.
I fully believe Cynthia and the rest of management team are working diligently towards a sale. I believe they are highly motivated. That being said they are equally motivated and determined to continue taking the required steps to advance the Ishkoday down the path towards being a mine. Optimal shareholder will be realized when an acquisition is made, to me its not a matter of if but when. We shouldn’t grab pitchforks and get mad when the end result is not realized in the timeline that we ourselves have defined. Its a beautiful mix of optimism and patience.
When you couple all of this with the announcement of a winter drill program as well as a lot more work to be done next year we are definitely moving forward one way or another! Be it more drilling or a buyout we have cash in the bank to keep going and are in an excellent position as we move forward!
I am happy to be a LME shareholder!
Lambo
Reference points of interest:
https://www.newswire.ca/news-releases/laurion-and-metals-house-inc-form-strategic-alliance-888357805.html
https://www.sedarplus.ca/csa-party/viewInstance/resource.html?node=W1982&drmKey=6a6b481fe134e4bd&drr=sse31009019ecfff5cc9d070edbe7c013e85c128137dffa738d8af321adbf7f58813c0df6a9447e8c968ac5b56b4f767cfux&id=0c11f8b7998bcd96f301e66d859e069bddd00cb44fe34802