The Interaction Between Medinah Minerals’ “Free Carried Interests” (FCIs), the Upcoming Assay Results And Leverage in the Case of Medinah Minerals Specifically
MDMN has negotiated for “royalty interests” in these projects referred to as “free carried interests” or FCIs. Holding an FCI, Medinah Minerals is not responsible to pay its pro rata share of expenses like the holder of the much more common “working interest” would. This represents a “hedge” in a mining environment in which costs are currently increasing at an average rate of 17% per annum (mainly labor and energy). This “hedge” has value and it mitigates a very significant economic risk. At the LDMC gold project Medinah Minerals retains not only a 30% FCI paid up front metaphorically right at the mill but it also has a 20% “ownership” interest allowing it access to 20% of the profit AFTER both the 30% FCI and the various operational expenses are paid. At the Nuoco copper project Medinah retains a 20% FCI again off of the top and a 20% “ownership” interest but with this “ownership” interest Medinah Minerals may or may notget a second kick at the can in regards to net profits like they got at the LDMC gold project. We’re awaiting clarification on this matter.
As you can see, with the 30% FCI/20% “ownership” package MDMN has at the LDMC gold project, they are EXTREMELY levered to gold assay grades and with the 20% FCI at the Nuoco copper project, they are highly levered to the copper grades at the Nuoco project. Part of this superior leverage at the gold project might be reduced in that at the vertical winze/shaft, production will probably be less than at the Nuoco copper project due to the restrictions associated with working with a verticle winze/shaft as opposed to having direct axis on a flat surface to the outside of the adit.
The terms as stated above are available via the newswire and the company website.
More to follow.
