you gotta love the clawback option, page-13

kevin103...

It has been a good day so far for all...we have got along, no fights or arguments...I suggest mainly because the usual suspects have been most obvious in their absence.

Just take a look at who did not post on CVI earlier today?

lol

Anyway...lets try to avoid the usual agenda driven diatribe shall we?

For clarity...I did not suggest CVI would get to $20...and you would be well be aware of this fact. What I did in fact suggest was that to give a practical example of how the ratio relationship between CVI and Pensador shares might work, we needed to look upwards.

I simply used the $20 line as a facetious example of an upper limit...a bit like having a 100% fib retrace line...we will never get there, but you need it to determine the other likely probabilities.

Suggesting I was saying CVI will be $20 is clearly designed to discredit me...not sure why someone would do that?

The simple fact of the Claw-back deal is that each of the two companies will be valued independently, based on which a ratio will be determined...the reality of which is that share prices, in as much as they do not relate to asset/entity valuations, will mean little.

The attraction however works like this...

Initially, Pensador is tipping in to fee carry CVI on the minerals side of the fence...in effect, Pensador will drop in value to the tune of what they initially spend, for the simple fact the minerals assets, for now, are not theirs...we can generally assume, given typical delineation costs, for every dollar Pensador spend on our copper assets for example, we will rise by about $10 (based on 5% of in ground metal value)

When Pensador have spent $50m (ie, dropped in market cap by $50m), CVI can be expected to rise to the tune of some $500m.

Workings:

I base this on the view Cachoeiras da Binga for example, should delineate at least 30m tonnes at 2% Cu for expenditure of about $20m (potentially as high as 51mt)

30mt x 2% x $7500/t = $4.5b x 5% = $225m

So...$20m spent equates to $225m of value add.

In fact, over the next 6 -12 months, Pensador will not rise in value considerably...in fact, given much of their value is in oil (and diamonds), both of which will see considerable outgoings prior to value increases, and considering the minerals outgoings actually reduce their market cap), chances are Pensador will still be worth not much more than $20 per share when the claw back comes, whilst CVI has seen millions spent on...and added...to the value of their assets.

As I see it, Pensador's real value add only comes once the oil assets are progressed, prior to which the outgoings will be significant! Admittedly, the diamonds will add ongoing revenue...and therefore value, but even here, in the initial 3-6 months, they will be spending some $60m dollars.

Even here though, CVI gains an added value add outside the Pensador value mode, via their 10% net profit "bonus" on the diamond profits.

Regardless however, any rise in the Pensador shares should see CVI's exposure (4.2m shares) rise by a similar level.

For example, if Pensador share were to double to $20, CVI's 4.2m shares would be worth US$168m...or some 32c per share (based on 530m shares fully diluted).

Lets look at this a little closer...

At $20, CVI's Pensador shares are worth 15.85cps (ratio = 126:1)
At $40, CVI's Pensador shares are worth 31.69 cps (ratio 126:1)
At $60, CVI's Pensador shares are worth 47.55 cps (ratio 126:1)

As can be seen here, the eventual ratio for any Clawback does not change regardless of what value Pensador increases by, for the simple fact CVI's exposure rises in concert with Pensador itself.

So, it becomes immediately clear the emphasis becomes to increase CVI's value outside of the Pensador model.

Given CVI have 39.5% of Fortitude, with a previously flagged intention of raising this to 60%+ (and possibly more - 100%?), it is pretty clear that a fair swag of our relative value climb (compared to Pensador), will come from here.

Important therefore that Pensador are funding this.

So the question for us, given we can ignore any rise in the value of Pensador, is how can we build value into CVI, separate from that being built into Pensador...and do it as soon as possible, or in any event, prior to any really decent value build in Pensador.

I reckon we have a window of 6-12 months in which Pensador will track relatively sideways (slightly up), in value...expenditure will roughly equate to value gain, as do most companies in the development phase...but CVI will climb considerably, obviously through the Fortitude progress, but also via additional assets they can back in...such as the potential IO assets, something via the Cameroon "pledge"…and of course the potential "secret women’s business" type of assets that might provide a real king hit when we least expect it?

The stage is set…scene one, whilst interesting, has been well flagged in the prelude…as such, we know what will happen, we just know exactly how they will present it!

Cheers!