Replies to post #3699 on Explor Resources Inc. (fka EXSFF)

[gharma]

Thanks for the observations MJ. Most of the reasoning makes sense. But I don't follow in a couple ways. If EXS would follow something of the project generator model, i.e. upfront chunk of change, timelines, mandated royalty advance if production not yet, 25% carried interest in the NewCo JV spinout, etc. types of terms - would not that also provide the base of funding for EXS to move on to its other portfolio opportunities and also potentially also benefit as the actual size of the property vended into NewCo is determined ?
I can see how one does not want to be in a JV other than as a carried interest, or as a working partner if not operator. But the model as a passive partner as a major takes it to production looks like it has been working for a number of companies.
TIA

[gharma]

Looks like I missed (the start of) much discussion relating to the strategy of the company, vis a vis the eventual disposition of TPW.
The one "big" factor underlying my thoughts on this, and I would imagine in CD's mind also, is how to realize full value when the full extent of the deposit is not known. I think we will all agree EXS cannot afford to do more than prove the scale of the potential. No one knows how deep the mineralization goes or how the grade and thicknesses change either with depth or with location along trend(s). It will be impossible to drill it all up to at least an inferred understanding / estimate.

IMO the company needs to accept a deal that appropriately discounts everything believe as the potential of TPW but that provides the ability to benefit from the "on-going story" as the size of the deposit becomes known; but a deal that also places EXS on a stable financial basis wherefrom exploration of the other properties can go forward without the need for continuous large dilutions. I am fine with some of the value received from such a deal being retained by the company, with my benefit being in the pps appreciation.

With this in mind, I had previously replied to MiningJunkie
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=69718323
and his two posts, to one of which this is also made as a reply
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=69667414
and its followup
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=69669257
in which was said

I've know Dupont for over four years and what he has consistently stated is this: "We will develop the properties, dress them up, and then lay them off to a major(s) in need of organic reserve growth." That's the model and that is the right plan. Let the majors spend the money and take the 3-5 years to build the mine after we the shareholders get the cash/lift.

From what I read in the recent discussion it seems others are of the same opinion as I have just mentioned, that letting go of all future ability to profit from discovery of the true scale of TPW is not the best or desired strategy.

It seems to me a simple royalty, even if structured as is sometimes seen that scales with AU market price and with project size, would not produce revenue to EXS in the near 3 to 5 (or longer) timeframe. I can understand the points MiningJunkie was discussing, about not giving up control except in a full sale of the project - anyone having interest might look at the ORKO situation where Pan American Silver obtained a large, 75% if I recall correctly, part of a JV over their very good AG property with ORKO's part being a carried interest through to production, and they have drilled and drilled with good to great results leaving everyone expecting a buyout, and expecting, and expecting.

EXS needs to establish a revenue stream as best it can, needs to negotiate a deal that adjusts as the full scope of the TWP becomes known and/or becomes sold (mined) AU, and with some savvy also gets recognized in the pps of EXS as the price of AU rockets higher over the coming years.

But, EXS needs to figure a cash stream from this, to sustain other operations and projects. That is very important to me, to view EXS as a long-term investment. If that means I do not receive a big "dividend" in whichever form, but only appreciation of pps, that is fine with me if of sufficient initial size. Higher pps, and its continued growth with success of TWP under the new operator and with AU price escalation, translates into less future dilution as well as more gain from my stake of shares.
How that can be structured I am sure there are many alternatives that have not been mentioned on this board, or heard of by myself.

There. 2 cent to end the year.

Enjoy tonight safely everyone :-)