ppc revisited

Whilst we wait for the JV to be announced, perhaps it may be worthwhile revisiting the PPC deal, and what opportunities may result from its execution. Back in December ....

GBM Resources Ltd Signs Non-Binding Letter of Intent with Pan Pacific Copper Co., Ltd
12/16/2009
GBM Resources Ltd. has signed non-binding letter of intent with Pan Pacific Copper Co., Ltd. which could see Pan Pacific Copper Co spend up to $55 million on the development of new copper-gold exploration and mining projects in northwest Queensland. A binding agreement is expected to be completed by January 31, 2010. If a formal joint venture agreement is concluded, Pan Pacific will earn 51% interest in seven exploration permits and nine exploration permit applications in GBM's extensive portfolio of tenements in the Mount Isa region by spending $15 million within the first six years - including a firm commitment to spend at least $2 million in the first two years. After earning its initial 51%, Pan Pacific will be entitled to increase its share of the venture to 90% by spending a further $40 million on exploration and development of the tenements over the following five years. During the farm-in period, GBM will carry out all exploration activities for Pan Pacific on the Mount Isa projects, which cover 1,580 square kilometres of highly prospective multi-minerals ground in the Eastern Succession of the Mount Isa Inlier." ....

Well, what might it mean if it is signed off. All good imo. Apart from the minimum $2m injection over the next two years, this agreement gives GBM the ability to raise finance through borrowing, without diluting equity. It gives them the flexibility then to rapidly accelerate the Tiger drilling programme. It dramatically reduces financial risk and it increases GBM's profile and ability to negotiate other deals, perhaps with neighbours. It increases the likelihood of the exercising of the 30 Jun options, which in turn may inject further funds into the company, further reducing financial risk, which in turn may increase the sp (again). Who knows, there may now be sufficient funds now to accelerate rock sampling, find a new rig and start T2 and T4 before June 30. New rigs will need to be found regardless, to fulfil the PPC program. Just announcing that T2,T4 drilling may start before June 30 would impact on the options value, increasing their likelihood of exercise, imo.

All we need now is to top it off with a new and better phosphate deal and (good) results from Malmsbury, T1 and T3.