This is a big departure from the original agreement.
The original agreement had ORR moving to a 25% interest on completion of the DFS and 51% dependant on whether the NPV of the DFS was above or below US$200 million. The previous option allowed ORR to move to 51% based on a sub-$US 200 million NPV for the project and staged payments totalling US$15 million which included a NSR capped at US$10 million.
I can’t see how they can say that ORR have satisfied the terms of the previous agrement to move to 51% when the DFS has not been completed (I don’t recall seeing the DFS?). In any regard they can get to a 100% cheaper by this agreement than the old agreement (ie they’ve shaved $US5 million off the upfront price but added $US5 million on top of the capped royalty).
I think this announcement shows just how desperate Acacia are to get out of this JV as they don’t even care about the outcome of the DFS or the actual value of the project. Surely the project must be worth well in excess of the US$200 million which would have allowed Acacia to trigger the claw-back to owning 75%. If it isn’t it’s got absolutely no hope in anycase.
There is obviously no appetite from Acacia to put another cent into Tanzania while the current president is in power, and why blame them. In the long run it looks like ORR have got this cheap but the funding hurdle will likely be long and hard while a cloud remains over this countries closing door policies on the mining industry in their country. Esh
