Two important disclosures were made in the October 5th Shareholder Update. One, “Medinah Minerals (Chile) S.A. and associates have received their contractual security deposit of 90,000,000 shares of Alluvia Mining Limited.” Very simply, this shows us that Amarant is committed fully to the terms of the contract. The reasons for just why this collateral represents a serious committment are given elsewhere but is probably best summarized by Kirk when he states “This collateral gives Amarant the incentive to pay us the full amount in cash at an accelerated schedule. If Amarant were to drag out the payments and Alluvia climbed in price we could start to dip into the collateral and sell the shares for more than the $0.60 original value.” This deal is done. Period. Any questions about tranches and payment schedules do indeed take a backseat to the 7.5 per cent NSR until complete funding is achieved, and the 15 per cent FCI for the life of the mine. More important than all this in the short term is that drilling is set to commence. The increase in blocked out resources will have an immediate effect on share price.
Secondly, “The contractual obligation for the first phase of work was USD $5,000,000, but the Purchasers have now budgeted and increased this figure to an amount described as USD $6,700,000 in anticipation of discoveries that may demand more extensive investigation. The neighboring Las dos Marias property has delivered such surprises and these discoveries have been closely observed by the Purchasers Geologists in the employ of Amarant Mining Ltd. and their associates.” It may be that a good portion of that additional $1.7 million dollars has been set aside for further investigation of the LDM. If Amarants geologists are keeping a keen eye on the LDM with rights of first refusal, what could be more obvious than to augment the adit assays with diamond core drilling? This would be done not only to ensure the presence of gold, silver and copper values at vertical measurements, but to measure the depth and thereby extrapolate roughly the tonnage of the entire skarn. Since skarns are somewhat “lumpy” and irregular in nature, a fair amount of drilling would be needed to get a fair estimate of total size. Because a sizeable portion of the skarn lies outside the LDM claim boundaries, restrictions on drilling sites to achieve this aim may not be a hindrance. Simple observations, but important, especially to the eyes of investors taking a first look at Medinah.
