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Isn’t solitario the prospect generator which holds “net profit interests” instead of % of projects or royalties? I wondered if a partner would do their accounting as movie studios do – such that financial partners NEVER see a profit …..
To my knowledge Solitario does not hold any, or at least any significant, net profit interests (NPI)…but even if they did I don’t see this as a problem. Callinan Royalties has done very well with their NPI on the 777 mine owned by Hudbay Minerals.
XPL IR said they would soon do a creative financing without dilution. I bet its SSL for Mt. Hamilton.
If the NPI works, then I like this company. The tradeoff in their model is that they are carried to production (as in the peru zinc) but receive an NPI rather than an NSR (paid on profits rather than smelter revenues).
That’s probably a decent guess, it is what we suggested to them last year but could be too early for that (I think a condition of the gold stream is that the money needs to be spent on mine construction or startup and they aren’t quite there yet). Unexplained SP weakness this week however suggests at least part of a package might be a convertible deal … we’ll have to see what if anything actually gets done in this piss poor market…
As for NPI, their deal is actually equivalent to a fully carried working interest and at 35% or 30% that is really a much better position in my personal opinion then a 2% NSR (more like being equivalent to a 4% NSR but it depends on the situation). I’m fairly certain Votorantim — their partner in the Peru Bongara zinc project — will not want a minority partner and thus will end up buying out the interest. My guess for the price, if it gets done sooner than later (say less than 36 months) is that it could be in the $50-$100 million cash range. No hurry at the moment but certainly Votorantim knows the price will not get cheaper if they wait. To Chris’ (XPL CEO) credit he appears intent to maximize value to shareholders for this project and therefore will likely hold out for a fair shake.
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