NML are currently raising A$40 million to pay for the initial phase of this $90 million transaction.
EVN who are selling this asset want to buy $20.4 million dollars worth of NML shares in this CR to keep their fingers in this sticky pudding which shows strong support for belief in a major exploration upside in finding extra ounces.
Ian Holland is putting in $1 million of his own hard earned cash proving his complete belief in this project and its exploration upside.
Then take a look at how much money NML could stand to make over time simply based on the figures provided by EVN in their divestment terms and based on today's gold prices...
50,000 ounces at $500 profit per ounce = $25 Million in the Bank
Then we pay EVN $5m = We keep $20 Million in the Bank
100,000 ounces at $500 profit per ounce = $50 Million in the Bank
Then we pay EVN $5m = We keep $45 Million in the Bank
175,000 ounces $500 profit per ounce = $87,500,000 Million in the Bank
Then we pay EVN $5m = We keep $82,500,00 Million in the Bank
-Above figures are based on an ASIC of $1700 and a lower POG being @ A$2,200 (less than the current A$2,400+ an ounce).
Then a further $25m payment is to be made buy the way of a 5% gold royalty payment IF the POG is equivalent or higher to $2,250/oz from 1 July 2023 up to 15 years….
POG will obviously fluctuate over time however in general and with upcoming inflation etc. POG should hold at these reasonable levels and could go much higher as it has done over the years.
Why would EVN be interested in buying 20% in the CR unless they were pretty confident in receiving these payments from NML’s production?
EVN Holding a good % of NML will also ensure that production will be overseen by them and and that it will continue!
It will also ensure that EVN will help in any future ventures/advice that NML may wish to encounter! This is a very good thing!
IMHO I believe that there is much much more to this story.
Simply look at NML’s JV with Catalyst Metals Pty Ltd at Tandarra.
Yesterday CYL employed their new CEO who;
“looks forward to Catalyst continuing to work with its Joint Venture partners to unlock the potential of its assets, and the Company increasing its already significant presence in the Victorian and Tasmanian gold sector.”
Whist the current CR is being done at a discounted rate it would be highly unusual for it to be done in any other way.
Over time, as long as production remains on target with the POG NML may never again have any further dilution based on the probable profits to be made from this new mine in QLD.
Plus
IMHO Management would not buy this asset unless they believed that it does have a major exploration upside of which will also help fund mining in Bendigo at Tandarra.
Whilst this announcement is ‘out of the blue’ this is probably the very best move that this company could make in order to expand on its other projects and towards its goal of becoming a major gold producer, and the proof is in the pudding because Evolution Mining completely agrees with this sentiment by grabbing 20%.
Now lets just wait and see how much over subscribed this CR is and hopefully watch the NML SP climb much higher based simply on the high caliber of this gold production purchase and the market also seeing that EVN believes in NML and its projects by buying $20m of NML shares!
It looks to me like Ian Holland is very serious about NML becoming a gold producer and wants to re-rate NML into being a much much bigger gold producing company! This is just the beginning!!
GLTAH+DYOR
NML Price at posting:
9.2¢ Sentiment: Buy Disclosure: Held
(20min delay)