Its about risk management. Right now they hav zero risk. They walk at any time.
They couldnt really T/o NKP now for anywhere near the current market cap of $200mil. For starters Genorah have a huge blocking stake.
They would only be allowed to accumulate 20% before making a compulsary T/O offer. But try getting your hands on 20%? Look at the market depth. You would push the sp up substancially and still probably be blocked by Genorah.
Perhaps they could accumulate NKPO. No need to announce substancial holding of options and can acquire more than 20%. But again supply is low.
Right now they have the best of both worlds.
They sit on the sidelines. Wait for risk to lower, then step in once NKP have done all the hard work.
Also Genorah has a direct asset level ownership. So buying NKP(even at $200mil) and then investing $1bil for capex, would only get Xstrata 74%($1.2bil) of the asset/resource.
Doing it the way they are, they get 50% for $50mil. You would then be left with Xstrata 50%, NKP 37%, Genorah 13%. Then buy NKP for $1bil. So for $2.05bil ($50mil option + $1bil capex + $2/sh T/O) Xstrata end up 87% of the project.
Realistically as buying NKP now would push up the sp significantly, the difference in cost between buying 74% versus 87% is minimal and justifiable considering the risk involved.
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