I think from the latest quarterly report we all now understand how the deal work.
Each time they transfer a 5% pre-payment, the purchase price for future delivery get "locked in" or contracted NOW, using an average spot prices of previous few days (5 days, 7 days,...). It is therefore common-sense that Quantum will want to wait for spot gold price to come down a bit so that it can lock-in contract price at as low as possible. Gold price over the last few weeks has always been more than USD $2200 and averaging around USD $2050. It looks like it is trending down towards USD $2000 and I think this is where Quantum will lock it in with pre-payment OR at whatever coming low before it goes higher again.
This is now a BIG GAME for Quantum. Imagine if they lock in contract price at USD $1900/oz like they did over the last few payments and at USD $2000/oz contract price for many of future pre-payments and when BEZ starts producing, spot gold price goes up to USD $2200, USD $2300 or even USD $2500, just imagine how much money Quantum makes on each 3mil oz of gold delivery over the next 15 years or so. It is MASSIVE. It would be bonanza profit for QUANTUM METALS. That's why it is a HIGH STAKE GAME for Quantum now to play and time it to lock in at as low as possible spot gold price (within reasonable time flexibility allowed under the contract).
That's how I look at the delay for the latest USD $9.8mil payment. They lock-in last few purchases at USD $1900 and they don't easily accept the fact that it is now at USD $2020-$2050 now. So, they wait to see if there is a chance spot gold price can drop back under USD $2000 to lock in. Of course if it does not go back under USD $2000, Quantum would have to lock in before gold price shoot higher into much expected $2200 range as soon as the FED gives indication that it is ready to cut interest rates.
AIMO.
BEZ Price at posting:
16.0¢ Sentiment: Buy Disclosure: Held
