The tests which should be applied by the other board members are...

The tests which should be applied by the other board members are -

1. will this transaction benefit all shareholders instead of the 40% shareholder, Chairman, and related party?
2. Are we being truly independent?
3. Does this project stand on its own merits, or is it just being foisted off on the company by the major shareholder, Chairman, and the related party?
4. Can the Company meet its existing obligations let along its new obligations?
5. Are we, the Board, being independent or are we being unduly pressured by this person proposing this deal?

In all these deliberations, the proponent of the deal ought to step aside as they would obviously vote for their own self interest.

As a related party, the deal will likely have to go to shareholder approval. The major shareholder would, I'd hope, not be able to vote his 40% share in favor, and should, I would hope, have to sit it out. Again, to stop the 40% shareholding being the major factor to enrich the major shareholder.

Now, is the price fair?

If these tenements, which are up to 5 years old, had been truly spent up for 5 years, it would be a +$1M expense by Mr Rodan and his entities on this ground. Which, one would think, is accompanied by reports, data, and indications of gold mineralisation he has uncovered over his 5 years working the ground. This is being sold for $275K (plus the $80K on rents now due immediately).

A good deal, right?

Well, that all depends. One would hope that the other shareholders, before they hopefully get a chance to vote for the transaction, will be presented with this evidence amassed after $1M has been spent on the tenements. This will then demonstrate the prospectivity, and demonstrate that taking up the $750K per annum in rates, rents, and expenditure commitments attached to the tenure (which is a liability!) will derive a benefit.

Also, 40% of the 3 oldest tenements comes with 1 year left on them before relinquishment. How much should one pay for tenements which are this old, this expensive, and about to 40% expire? Not much, I would think.

Caveat emptoror!