I like your version better, too! That would have been a steal!
You have to look at it from the sellers perspective. They had planned to start mining and only have their ore processed at the 700 ton capacity Pride of the West until they could construct their own 100 ton capacity mill at the Silver Wing. At that point all the income from the mine would go in their pocket.
CGFI would have received short term cash flow from this, but not much long term. This way, the seller compromises some of his future riches by joining forces with CGFI, but doesn't give away the whole works. Half of something is better than all of nothing.
The restricted share size might seem huge, but it's still just a percentage - a piece of the pie.
(On edit, you can also think of it as buying out the competition. Having the only mill in town doesn't hurt my feelings.)
