Post by
FrozenInOntario on Apr 30, 2021 1:52pm
Question on deal with Rodriguez
So they bought 4.5% of the project for 1.5 millions USD. Very good deal. But why did they do this right now instead of buying the full 9% and the .5% smelter royalties for 16 millions ?
After all, buying 9% for 16 millions USD values the project at 177 millions USD or say 220 millions Canadians which would be lower than the current OCO market cap which values the project at 670 to 700 millions CDN based on the current share price and 81% ownership.
Another way to look at it, buying the extra 4.5% would have cost them an additional 14.5 millions implying a value of 322 millions usd or roughly 400 millions Canadian. Buying it would have been accretive.
So was this option about to expire ? After all, Oroco has the cash to drill but not to buy out Rodrigues. Otherwise, why the rush ?
Last point, wonder if Rodrigues kept his smelter royalty.
GLTA
Comment by
johngalt77 on Apr 30, 2021 2:28pm
I believe that the $16M deal was structured over 3 years from registration. So I think the time started ticking since Jan 2020.. I believe that next year the payment would have been steep, something like $12M or so.. I think that they felt it was better to get this out of the way now and focus on drilling this vast resource with the funds they have.. Win/win for all Cheers JG77
Comment by
FrozenInOntario on Apr 30, 2021 3:59pm
OK. Difficult to assess when one does not know the structure. And thinking about it, they would have had to dilute to buy it out right now. And pretty sure that if they do another raise, it will be to drill. Still woulld love to know about the smelter royalty, much better to remove it when they package Orocco to be sold. GLTA