cerhobI do agree regarding todays activity - quite an...

cerhob

I do agree regarding todays activity - quite an extraordinary frenzy which reflects that phosphates are hot sector.

Regarding the deal to pay for it I think we disagree here. I think it's a very good deal. If you'd noticed the conditions precedent you would have realised that the company won't have to pay anything if its not a goer with even shares issued for sign on being revocable. One of the conditions precedent includes this clause:
"Union forming the view that the exploration and proposed development of phosphate mining operations in the areas of the EPLs is commercially viable".

Nice clause!

9 million shares, 9 million options (exercisable at 13 cents) and $500k cash and a 3% gross revenues royalty capped at $10 million will be a cheap price to pay if the project proves up.

The most it will cost the company would be if the $10 million royalty was earned. That would mean the project would have delivered revenues of $330 million. The price for that much revenue on the 1.2c share price at time of announcement would be:
9 million * 1.2 cents = $108,000 plus
9 million oppies expensed at 13 cents = $1,170,000 plus
$500k cash plus
$10 million royalties
equals total
$11.7 million

Pretty good deal if it can generate $330 million revenue.
And if the project is not viable, total cost? NIL

We need another thread to consider the announcement rather than the trading and the possibilities of the project.