Hola Amigo, I can see we are all a little confused so let me paint a picture.. Leaving aside the discussion on the amount of rights that are warranted or not just for now , this is how it pulls together. Note: a further 9m or so Class E shares vest in 3 tranches IAW the milestones below, ref Nov 20 presso.
Please also note the fair value assumed and the probability of achievement when these were first drawn up at bottom of post.. Whether this was too lenient or not I don't know but I would rather take a 2m oz deposit and pay the man than receive a 250k deposit and not.
The dates for determining achievement of the rights A, B & C are set out above and I agree they don't mention the term economically viable.. However the Class D rights do mention economic viability and tie the resource to the delivery of a BFS/DFS at a value between 250k oz - 2m oz at a gold grade of 1 g/t or greater & which demonstrates commercial viability.
Now the date for delivery of the BFS / DFS is 29/01/2025 which is 3.5 years after the class A rights expire I agree.. But this is where we need to look a little further afield and join the dots.
From a December release form TSO we can see that they have achieved 70% ownership and will only proceed to 80% if the deliver an FS (BFS/DFS) one might assume by Jan 2022 and pay the sum of $50'000 US in accordance with the vendor sale agreement. If they don't then they will not achieve the 80% earn in and will forfeit the right to negotiate in good faith the rights to purchase the remaining 20% with the current vendor.. Which is a huge incentive to do so, wouldn't we agree?
Now under the El Zorro deal structure of sale we can see that a milestone is req to be achieved is actually 17 Jan 2022..
So yes I accept that you have to join the dots, but the information is all there on the public record.. And whilst theoretically Zeff only has to produce 250k oz by the 29/7/21 if it proves economically viable (And yes he could just deliver a PFS to establish commercial viability under the FS caveat) under an ?FS by the 17/1/2022 the fact he is drilling another 30'000m on top of his existing potential resource would indicate he is going for the Dr, or just loves wasting money?
For me a PFS doesn't quite cut it, they get refined all the time, so to demonstrate commercially viability beyond doubt you would have an M&I resource that pins to a BFS/DFS with proven & probable reserves and a therefore a bankable outcome.. This would then allow Zeff and I dare say the vendor to establish the actual net present value of the remaining 20% and begin negotiations on achievement of the 80% milestone in achieving 100% ownership.
That is my take on things.. Yes there are a number of performance rights, but there is also a fair value riding on them being achieved by A. 29/7/2021 & then 17/1/2022.
No wiggle room, they are hard deadlines..
As for the legitimacy and value of the rights at the time, I can only offer that they were determined and voted upon by shareholders at the adoption of the prospectus terms at the beginning. And dare I say reflect the effort of the founding directors McNamara & Reeves (and their association with Sergio Uribe & Jose Bahamondes) in making the TSO story a reality, for otherwise it would not exist.
People may not like it, but it has always been there so no one has been mislead and to say to people it is a good reason to sell their shares before JORC release is a little disingenuous and perhaps miss-informative IMO! Because what do we expect the SP to be if say the company were to release an MRE of 1-1.5M+oz and support it with a BFS/DFS showing first rate IRR & NPV? Somewhere considerably North of where we are, one might guess (ref Bells project below).. Have good day folks & GLTAH ..... 8tey
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Either way, good reason to sell before the announcement of a JORC...unless someone wants to ask Z.R why he thinks he deserves circa $30mil this year for doing a good job and why around $2-5mil would not be more proportional?"
