Tudor Gold Corp V.TUD

Treaty Creek ownership structure limits Tudor's options...

[rockport1]

Treaty Creek's ownership of 60/20/20 (TUD/TUO/AMK) makes potential options and JVs problematic.  For example, if Tudor wants to bring in an option partner, how could it be done?  Most potential JV partners will want 50%+1.  That would mean some spending committment to earn the 51%.  However, because Tudor only owns 60% and must fund all development until a production decision, it would require they give up all but 9% of the ownership.  Not a viable option.

Therefore, to bring in a partner, some consolidation of the ownership will first be required. The most likely scenario IMO, is Tudor buys out both TUO and AMK.  To raise funds for this, it will probably require a third party rather than Tudor financing this on its own. 

However, a supporting entity will likely require at least a PEA first.  Once the PEA is completed, perhaps Tudor could finance the buyout. This would allow the consolidated Tudor to strike an option agreement with another entity.  Or a buyout of the now consolidated (100% Treaty Creek owned) Tudor could take place. There are other scenarios where a buyout one or both of TUO and AMK could also happen first. 

The Seabridge MTT (tunnels through Treaty Creek) also complicates how everything unfolds. I highly doubt that any company will buyout SEA until after this issue is resolved. According to the 2022 PFS, the MTT will cost $956 million (Tunnels $649 M, MTT materials transport $307).  As far as I can surmise, there is no provision for any legal costs or compensation to TUD/TUO/AMK.  This suggests KSM and Treaty Creek are intertwined by more than just proximity. 

My inquiries to two of the CEOs reqarding the MTT issue has been met with essentially "no comment" because the issue is in the hands of the legal teams.  All this to say, SEA is under some pressure to resolve this issue, because their permitting is tied to a tight timeline, and this could potentially affect what happens at Treaty Creek.  

Interesting times ahead...

[Olympia2]

TUD could buy out TUO's and AMK's 20 + 20% in an all for share deal. Problem will be the premium for the carried interest, which could be quite high, at least  calculated with the current share price level...

[rockport1]

@Olympia2 Yes, could also be done as a share deal. However, I agree valuing the carried interest is not straightforward. Since most of my TC holdings are in TUO, I would prefer TUD to carry the load as long as possible. Free ride.  Plus Teuton's NSR would have significant value as TC moves closer to actual production.

[Larry60]

tuo and amk are laughing.  good for them

[rockport1]

Actually Teuton is the one laughing the loudest.  How do you value at 1% NSR on Treaty Creek.  If they prove up a mineable 15 miilion ounces, that NSR is worth an undiscounted U$225 million @ $1500 gold, and $300 million at $2000 per ounce.  Of course discounting required at your pleasure. In any case, if they produce a million ounces a year, at $2000 per ounce, that is essentially