Bob,
I don't doubt that Naneco is trail-blazing in China WRT mining and that they are reporting very interesting intercepts at this property. To play the devil's advocate, however, what is the Chinese government's obligation to permit NNE to walk away with any of the cash from such an operation?
If I understand it properly, NNE's Chinese partners have a 30% 'carried interest' in this property (i.e. they have a free ride - based apparently on their citizenship and on the work that they carried out on the property before NNE came on the scene (I understand that the partners had drilled some 400 holes on the property and had many assays done before they ran out of funds). Please correct me if I'm wrong on these issues as I'd like to know more about this venture.
If I'm right, however, a '30% carried interest' would translate into a very high percentage of the total profits that NNE would have to share with its partner - after bearing the full costs associated with any feasibility studies and production equipment, etc. required as well as operational costs.
How much money does NNE have at the present time? Do they have sufficient funds on hand to start production and generate some cashflow? If not - and I understand they do not - NNE would need to raise capital and it will most likely be through the issuance of further shares.
So, for arguments sake, say they needed to raise $C 4,000,000. That would mean that at $C 0.40/share, they would have to issue 10,000,000 more shares - increasing the number of shares outstanding by a significant number and percentage. This would have an impact on the value per share - no?.
I don't want to pre-judge the potential of this situation and so I would appreciate it if you could tell me how you see the situation unfolding?
Brian |
