Iron Ore & Tin price, page-916

Charlie

I agree broadly with the sentiments in your post. But I have another take on how the WA assets might play out. I reckon it could hinge on Thor and CHN.

Let's not forget that CHN came to us, proposing that they investigate Thor. Many posters and AR himself have said that. It follows that it could have been their idea to form the Joint Venture. That is, they likely have an inkling that we are sitting on something of significance and they want to be involved.

What I drew from the excellent post of Tarampa a couple of days ago (#: 56724358) is that one standard operating procedure of CHN is to form a JV, get out of it as soon as possible and take control of the JV assets. At least that is what I gathered, but if Tarampa disagrees no doubt he will correct me.

All I know about the structure of the JV is the summary that was set out in the Annual Report. Taking that at face value, my reading of it is:
1. CHN earns 51% interest in the JV by expending $1.2M on exploration by next July. That's when they get control.
2. They can spend a further $2.5M in another 2 years and become entitled to 70%.

3. If CHN earns the 51% interest it does not have to proceed with the next stage of spending more $$ in order to earn the extra 19% interest.
4. However if they remain at 51% without going the extra yards they get effective control anyhow for the duration of the JV.

If CHN gets to 51% and knows what is in the ground by spending $1.25M (which it probably already knows or suspects) why would it go to 70%?

(a) Going to 70% and/or leaving the JV in place any longer doesn’t really improve CHN’s JV position. (b) Finding more resources or developing the asset increases the value of VMS's passive 49% or 30% interest, for which VMS (apparently) doesn’t have to do anything.

(c) Going to 70% could possibly lead to a royalty payable to VMS.

So if I am right in my reading of the JV summary and of Tarampa's post about past practice, I think a possible scenario is for CHN to go hard to prove up Thor ASAP, spend their $1.25M and then claim their 51%. Then sit down with VMS very soon after getting to 51% to negotiate a buyout. After all, why would CHN not want to get the whole of the value of the increase in value and the JV assets for themselves?

If the JV is terminated fairly quickly like this, and if Thor turns out to be as big as we hope, we might find ourselves being able to fund Tas and the rest of WA from the proceeds of termination of the JV.

Just a thought.

But if I have missed something, or if there is afatal flaw in my thinking, or if Tarampa or anyone else disagrees with this, Iam happy to be corrected.