The longer I think about the Edna May deal the more I like it it.
I see it (a bit simplified) like that:
Phase 1:
Mining to the bottom of the existing pit. 200'000 oz with no studies, no CapEx, no nothing. Just mining, processing and cashing in. We have paid 40m for that but with a margin of, say, 300$ this should generate almost 60m of cash flow.
Phase 2:
Now, the mine is paid off and ours (including plant, infrastructure etc.). With all the first-hand experience from phase 1 management can make an informed decision whether to got for the open pit option, go underground or do nothing. 100$ / oz royalties to EVN for the next 500'000 oz.
Phase 3:
If the mine is still not depleted, just blue sky. No royalties to EVN after the first 700'000 oz.
Very little risk and lots of upside with that deal!
The longer I think about the Edna May deal the more I like it...
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