RE: interesting articleCofro,
You wrote: “As a cantex shareholder I think we are being hosed on this find,”
I wish that things would have worked out differently for Cantex. Although you may be right, I can’t say I totally agree with that opinion. Yes, CD did have the area of the original Umiiviit licence under its umbrella as part of its JV with BHPB (Diamet) and Citation. CD originally held 20% and diluted it down over time to 10.something% I believe. As the concession had been held for a number of years the annual exploration expenses were growing substantially. The funds to hold the concession did not exist.
So what is the next best situation for CD?
CD has the $10 MM database on the work that had been completed by the former JV and could have been in the drivers seat had not Citation, which became MacArthur Diamonds published detailed data pinpointing the exploration area and its prospectivity. Now the information is in the public domain and CD had no money in the bank!
Months pass and the concession expires, the remaining JV partners obviously not having the funds to continue the work. Metalex seeing the information in the public domain picks up the former concession and being a totally new concession holder has a new lower annual expense commitment. Metalex has the funds to purchase and the ability to raise funds to develop the concession and needs not involve CD.
Perhaps to appease all his friends and family that have invested in CD, CF finds a way to involve CD as we all now know.
So what were CD’s options?
Looking at Metalex’s latest financial statements, if the Greenland concessions remain the present size, the minimum annual exploration commitments are; 2005 - $1,027,355 ; 2006 - $2,052,844 ; 2007 - $4,883,043 ; 2008 - $4,883,040 . Yes indeed, Cantex would have had to rise over $12MM to commit to a similar program by itself! Yes, I know that the numbers in the second through fourth years maybe reduced if unproductive land is shed but I am looking at the maximum possibilities. Now, CD last year raised $3MM which added 60MM shares to the float and if we had to raise $12MM under the same conditions we could count on another 240MM shares – I doubt that would be possible. So in return for the 75/25% split we get a free ride for years 2005,2006 and 2007 according to the Metalex financial statements. That’s a potential $8MM worth of work without laying out a penny. If Greenland proves a bust it cost us zip, if we hit something hot we benefit but not as great as MTX, which bears all the risk. Of course I would have liked to see a split closer to 50/50% but look at our negotiating position we don’t really have a strong hand to play.
P10