the fact that we did have such a contract negates any kind of weak negotiating
position argument
Both parties would have read the contract carefully. The problem, in my opinion only, is the requirement for the FS to meet 5.5 (b) (i), "...generate a NPV of at least $ 1.00 using a discount rate of no less than 12%...". The FS has a table using discount rates up to 10%, but it is clear the base case would be negative at 12%. So imagine you're sitting at the table with Teck and presented with the following options. One is to work together, via a new JV contract, to find a way to develop this property into a mine. The second option is to serve us with the FN, which we will rule is not a BFS under 5.5 (b) (i) as per the contract, we will not convey the indirect interest and you can try to shop your portion , the direct interest, as best you can given the marginal economics and the fact we are in conflict. So how do you wish to proceed? This is just a possible scenario. You are right in that we don't know what discussions occurred and only the parties involved know why the path was chosen. My focus now is to see whether or not Teck intends to do something with the property in a timely manner and whether or not there is an opportunity to make some money on CUU shares. |
