Ann: ENR and IGO to advance Paterson Copper-Cobalt Exploration, page-9

This company looks like it may have some nice upside.

Exactly, looks like Paterson province is shaping up to be the next hot spot if you believe all the stories about impending Copper shortfalls in global supply looking forwards and if there is truth to Rio finding a massive copper play in the area.

The smaller explorer end of town will be getting more attention from the bigger players as it's cheaper to buy out an undervalued spec than to go out and explore yourself with all the layers of guff that bigger companies support because they're big. (check out quote on slide 3 of leading project generators preso by the Sprott guy)

Having NCM and IGO pony up for these guys means there has to be some quality of assets there. They can pump their money anywhere but this is a nice confirmation for ENR.

Also when you look at the terms of both agreements (NCM & IGO) it allows ENR to pretty much get a free carry, assess any future finds and see about either raising the money to participate OR not and get a free ride on smelter royalties thereby guaranteeing a payout upon any success.

"Earn-in and Joint Venture AgreementThe key terms of the earn-in and joint venture agreement (should IGO exercise its right to form a jointventure under the earn-in agreement) are as follows:• IGO may earn a 70% interest in the project by sole funding $15 million of expenditure over 7 years;• During the earn-in, IGO shall have the right to be the Manager of the project;• Upon IGO completing the earn-in a 70:30 joint venture will be formed, and the parties mustcontribute funds based on their percentage interest to maintain their respective interests; and• Standard dilution clauses will apply to the parties’ interests. Should a party’s interest dilute to below10% it shall automatically convert to a Net Smelter Royalty."

Newcrest agreement has similar terms.

The thing here is should there be a decent find and some solid exploration success you have two mid sized players who might just say screw it, this is too messy let's just buy  these guys out and take full control of this tier 1 asset. Memories of IGO and SIR???

Pure speculation but not outside the realm of possibility, hence I'm in for a punt.