terms of comval project acquisition

Hi all

just returned from hols o/s. MNE was the only stock I retained whilst away (with a stop-order in place of course). Nice to see a lot of interest and the price where it is at now.

I've been re-reading the original terms of the Comval project acquisition, which include certain contingent consideration. What is interesting is how far down the track this compensation for the acquisition kicks in. The vendors (Philco Mining Corp) seemed to weight their required consideration towards future events and the share price hitting $1 rather than say taking all as cash/shares and walking away. Contingent liabilities included the following (this is taken from the last annual report, note 19):

"As part of the facilitation agreement the following contingencies may have to be met. For further details refer to the Prospectus lodge 22 December 2011.

a) When (and if) the Company’s share price trades at or above $1 for 30 consecutive days, issue to Cadan 2,600,000 fully paid ordinary shares; and

b) If, within 24 months of settlement of the Acquisition (which period may be extended by up to a further 24 months).
Cadan is successful in resolving the dispute as summarised in the Prospectus, section 3.5(d), lodged December 2011, the Company must make a further $1,000,000 payment to Cadan within 6 months of the dispute being settled. Cadan subsequently notified the Company that, in its view, the dispute had been settled within the terms of the agreement. Mining Group is reviewing its position and will update the market in due course.

c) Philco shall pay G. Lluch a production royalty (“Royalty”) of CAD$2.00 per ounce of gold and a Gold equivalent produced from a Philippine Government approved Commercial Production from the Mineral Properties. From the
date of Commercial Production until the date the Royalty takes effect, a quarterly Royalty of CAD $25,000, in advance, shall be paid to G. Lluch. For valuable consideration, and under such terms and conditions as the
Parties may agree, G. Lluch grants either to Philco or MNE, the option to purchase the Royalty from G. Lluch by paying the latter a fair and equitable once-only royalty payout by either of Philco or MNE of not less than CAD $2,000,000 which option may be exercised by either of Philco or MNE at any time prior to the commencement of any Philippine Government approved Commercial Production.

Mining Group Limited to pay Cygnet Capital, or its nominee a 3% Net Profit Royalty (NPR), payable on Mining Group’s
interest in PMC. The royalty should be calculated only when Mining Group is profitable for 8 years, not necessarily
consecutively."

source: http://www.asx.com.au/asxpdf/20121018/pdf/429grnjsd340pk.pdf




These, together with the relatively high initial payment (now fully paid I understand) imo goes some way to indicate the level of confidence the vendors had/have in this project reaching production.

Anyways, as echoed across this forum, the next few weeks will be really interesting. Great to read some top analysis from posters here.

Cheers