At a glance it does look like a very positive move by VCN and this might just show what the future intentions are for a merged VCN/URL.
With this acquisition the Kylylahti project will be much more enticing to any potential financiers than say the Roseby project, solely because of the significantly lower risk the project faces.
I think this is a very clever move by AC & the VCN board. If they tried to focus on getting Roseby up first, they'd burn through their cash in no time at all whilst still having the difficulty of trying to convince lenders to hand over in excess of 250 million.
Now they can get Kylylahti up and running by 2nd half 2010 for far less costs compared to Roseby, then direct a good chunk of the returns to fund Roseby later down the track, say in 2012/13 once the capex has been repaid on Kylylahti?
By that time Xstrata would have to make their intentions clear and it could end up being that the new entitiy only has to come up with 50% of the capex for Roseby with Xstrata having to meet the other 50% (and then some) based on the terms of the original agreement between URL and Xstrata regarding the 50% purchase of SEEP and ultimately, Roseby.
URL Price at posting:
22.0¢ Sentiment: Buy Disclosure: Not Held
