Claude:
One place to get info. on all of WTC's projects is on their web site at:
westerncopper.com
They have all sorts of stuff, including detailed press releases which I have found to be quite helpful.
Re 22.5% ownership
In the following news release, WTC explains a bit about the percentage ownership:
westerncopper.com
Quoting from the press release:
"Each party is responsible for its own funding of the El Salvador Project based on the initial interest 55% Teck and 45% Western. Teck has the option to earn an additional 10% interest by arranging 100% of production financing. Teck may also purchase from Western, upon completion of feasibility, an additional 5% based on the Net Present Value of the Project."
So, in terms of the joint venture, WTC can be reduced to 30% ownership of the JV. This is not without compensation of course. To get the first 10%, Teck would have to do 100% financing of the project. Assuming that the mine will cost $100M to develop (for lack of a better number), WTC will lose 10% of the property, but will avoid having to pay $45 million.
In terms of the next 5%, this has to be purchased based on the net present value of the project. So WTC will get a fair price and the more the project is worth, the more that WTC gets (assuming Teck picks up the option).
Now, we still are not at 22.5%, but we will get there soon. The same press release states that "Drill holes SAL-25 and SAL-24 are located on claims optioned from Luismin S.A. de C.V. ("Luismin") which has the right to participate with the Teck/Western joint venture, as to 25%, if the property is taken to commercial production. The Luismin participation falls to 15% if it does not contribute its share of production financing."
Presumably if this is a world class deposit, Luismin should have no problem coming up with their share of project financing, and will own 25% of some of the properties on which WTC has made discoveries.
So if everybody picks up their options, we have the following ownership:
WTC: 30% * 75% = 22.5% + Cash equivalent to 5% NPV of project
Teck: 70% * 75% = 52.5% - Cash equivalent to 5% NPV of project
Luismin: = 25.0%
This assumes that Teck and Luismin will paid for as follows:
WTC: 0%
Teck: 75%
Luismin: 25%
Please, if anyone can see an error in these numbers and calculations feel free to correct them.
The one thing that I am not 100% certain about is if the Lusimin option only covers the one deposit, or if it covers the entire JV exploration area. All of these companies with options is somewhat confusing, and now there's a new deal with Kennecott to further befuddle us. Just when I thought that I had everything figured out ....
Regards,
John Sladek |
