Ann: Pre-Paid Royalty Mandate, page-16

Royalty mandate also acts as a bit of a disincentive to other future investors because the royalty is with the project now for life of mine or until buyout. So if they were trying to sell the project they will get a lower fee because the profit is affected by the royalty. If they were going to develop the project and needed to fund the capex, effectively there's a higher class of investor who is in line to get paid before anyone else as their money comes off the top line. If margins are slim because the AISC is high compared to whatever the mysterious price of garnet is these days, then there's an extra hurdle of royalty money being paid that's straight off the top line.

It may well be that they couldn't get an adequate deal on traditional finance and went for this, rather than some masterful scheme to not dilute holders. After all, with a company that has a market cap so small they probably would rather increase their float a little and get more liquidity into the stock. All major holders can tip some coins in the hat on the raises to top up, so no one is overly diluted and the market cap of the company would grow a little.

The risks on this project are stacking up:
- board fights
- huge project capex requirement relative to market cap
- no exchange price for the material (all private contracts)
- "next pumpers" given shares for articles
- financing via royalty and not traditional capital-raising methods
- main product produced is readily recyclable

It's fine if you want to throw your money at it hoping for long-shot, but for me there are only 2 pathways to success:
1) hype the crap out of the project and hope your market cap catches up to the capex requirement so you can raise at a reasonable dilution (seems to be the current plan)
2) develop the resource as cheaply as possible and sell the project to someone who has the money to bring it to commercialisation (what I think they should do)

Either way you'd be putting a lot of trust in management to pull either of these off, the same management that have been fighting for control of the company...