in order to get as good an understanding as we can, we need to do our best to understand the thinking and rationale of pp, analyze a few things that have happened:
A. why the small scale mining did not go on.
As I recently explained, I will repeat here:
All deposits are not the same- some are richer than others.
The small scale project would have skimmed the cream, so to speak. The lower grade ore would be left to process in our own mill, hopefully at a later date.
Trouble is, when you go to smelt, you need some richer grade ore to help precipitate the gold out of the lower grade ore- it draws it out and amalgamates it.
I am sure that when PP and his team looked at the ore strata very carefully, he came to the same conclusion we did a few years ago: pulling the easy to access richer ore would make things more difficult down the road. So, since MAT was not broke, he took the more conservative, and ultimately the more productive path of NOT doing the small scale project. if he had done it, it would have made him into a temporary hero, and things would have looked good for a while-- but it leaves a lot less on the table to share with an informed and experienced partner.
B. why Shandong provincial and Kinwa did not work. First of all, the release never made it clear that a L.O.I. is what is says; a letter that a group intends to do a deal. It is no kind of commitment of any kind. 9 out of 10 LOIs never make it to the commitment stage. This should have been explained, like it was in the last release-- good example of live and learn. Those two deals failed because they were structured backward. Paul, very shrewdly, extracted a good sum in advance of any work at all, so to speak.
I believe that when they started to review the massive amount of documents and samples that we have= they filed a warehouse, they realized that they were in over their heads.
Neither one was a miner in their own right.
C. Now look at the structure in place, and the proposed players. The structure is excellent: MAT is not taking money up front,leaving them free to spend the $100,000+ that a serious due diligence takes. This means they can fly in anyone they want, and look at anything they like- and get very very comfortable. Only then, do they commit to the major financial feasibility study, the last step before actual mining. The cost of this can run close to $8M or more- and when you are done,you are ready to start drilling and building.
Even better, PP will be in the position to negotiate with either of the top two countries, now that there is a third one.
Here's why:
Shandong produces 1 mil. ounces of gold a year. that is $1.5B in gold sales. How big are they?
--Newcrest Mining Ltd. is the 8th largest in the world at 1.1M ounces.
--Gold Fields Inc.number 9 produces around 1 M ounces a year.
Headquartered in Johannesburg, South Africa. They have operations in South Africa, Ghana, Australia and Peru. They have gold production at 906,000 ounces in the first 9 months. Their aim is to increase production to approximately 925,000 ounces in this next quarter.
--Lihir Gold Ltd.number 10 produces just under 1 M ou a year
1 to 1,2 million ounce.
-- Rio Tinto is a little hard to place, but they seem to produce around 1M ou a year.
--Agnico-Eagle Mines Ltd.in the first nine months of 2009 was 329,628 ounces. For the full year production is expected to be approximately 500,000 ounces of gold.
So, doing a deal with Shandong Gold is a VERY BIG DEAL.
Not only that, but doing a deal with China Nerin is also a very big deal-- they build mills! Go to their website and you will discover that they are a major international player.
Both of these boys know gold- with breadth, depth, and deep knowledge, expertise and commitment.
However, the business world is tough. they each know their own strength, and will certainly try to overpower PP and MAT.
So, PP does TWO very clever things: he lines up additional L.O.Is so that they know that this will be a real bidding situation- and now he has a line of credit so they know for sure that he has the financial staying power to hold up our end of the deal. pretty good, if you ask me.
|
Thread abonnieren
