Ann: Peak secures BFS funding for Ngualla Rare Earth Project, page-38

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cashman2284

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29/09/14

14:03

Post #: 14043468
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Originally posted by cashman2284 ↑

sjl,
If the structure is as simple as you say then I dont see this being as bad as I first thought.
Firstly, they have raised the majority of the funds between 9-10.5cents. Whilst 9 isnt the best it isnt the end of the world. The Shaw report said Peak would have to raise $42 million in equity raisings @ 10 cents. Thats 420,000,000 shares. In this current situation I have worked out that we will issue a maximum of 240,137,500 for US 25 million but have also given 2% of revenue away.
Shaw stock brokers used the scenario of selling 49% of the project for 58.5M. Whilst we only got half of that on face value you have to take into consideration that if we had divested 49% then we would have paid 48.5% capital gains tax which would have left us with US 30 million. So we arnt too far off from what the broker report had thought if you look at it that way.
They also have caveats if they want board representation which includes % ownership which is good for us meaning the CI will need to hold onto their holdings and not dump on market.
One other thing - This means we maintain 100% ownership rather than selling 49% (divestment) AND issuing 450M shares. A divestment is gone forever and you get no leverage from that 49% for shareholders if the price of rare earth skyrockets in the next few years. (not saying it will by the way but just as an example.
This will be enough funds now to get them through to decision to mine. They should be able to use the BFS plus some equity raised to secure debt funding which would be great as the IRR is still attractive.
I see the investment as short term pain (due to not getting a higher figure for long term gain - 100% ownership).
I will do some further sums tonight if I get the chance.

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Please note what I have written above is wrong. 37.5% has been divested.

PEK Price at posting: 7.9¢ Sentiment: Buy Disclosure: Held
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