Post by
Newton1234 on Jan 05, 2022 2:06pm
Consider: JV spending requirements vs cash buyout
In a JV with a major, the junior is on the hook for matching spending pro rata. So if SSRM starts spending tens of millions on development then TGC must match or risk getting diluted down to a royalty.
If there's no takeover and it's just the JV then there is potentially a big financing requirement for TGC in the future. Very complicated strategic issues that can result in the little guy getting squished. In comparison, an all-cash buyout is simple.
Something important I like to think about in situations where a junior has an interest in a JV with bigger company.
Comment by
HornbyBay on Jan 05, 2022 11:44pm
For a small junior, it is usually better to negotiate a carried interest until production. Disclaimer: I own shares of Taiga, just my opinions, not investment advice.