Hi John, bit of an off topic question for you and/or anyone else...

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Cashmeoutside

859 Posts.

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03/11/18

08:08

Post #: 36376989
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Originally posted by JID ↑

Hi Guys,

Reading through the QR, I got the sense that the scale of the opportunity could be overwhelming MOD.

This belt could consume a geologists' entire career and they probably still wouldn't have found all the Cu within MOD's tenements.

I think that it is very sensible to carefully consider how they can maximise the potential here.

One option, which I think they should seriously consider is a similar structure to that which Gold Road pursued with Gruyere.

In MOD's case it could look like this:

(1) Sell 50% interest in T3 development project to mid tier producer (e.g. Lundien Mining) for, say, 30% of NPV (let's use Cashmeoutside's estimate of A$400m NPV on a 100% basis). That would raise A$120m cash.

(2) MOD would still own 50% of T3

(3) New JV partner is responsible for funding the capex (lets say $180m via project level debt utilising their balance sheet and lower cost of capital), managing development and operating the mine (all things that the JV partner would be good at).

(4) MOD now has 50% of the future cashflows of T3 locked in and doesn't have to worry about all the tasks that they are not geared for in developing and operating a mine.

(5) MOD can then apply their cash of A$120m to the exploration of their tenments.

(6) Any new deposits found proximate to T3 can be included in the 50/50 JV at a pre-arranged price, much like the deal MOD has just negotiated with MTR

(7) Any deposit(s) discovered at T20 could be developed as a stand alone project on a 100% basis, or another JV arrangement made.

This way, shareholders of MOD would not be exposed to dilution at a Company level now, nor face the risks of developing T3. MOD can get on with what they are good at - that being exploration with a massive cash horde and the knowledge that they will be earning 50% of the profits/ FCF from T3.

Just idle thinking.

Cheers
john

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Hi John, bit of an off topic question for you and/or anyone else on the forum...

MOD appear to have had success identifying domal targets with airborne EM. But AEM has its limitations on just how far below surface it can identify anomalies. With MOD drilling 600m DDH at A4 in search of the (what appears to be) deeper D’kar/NPF contact would it not be wise to do some DHEM to help with the interpretation of this contact? Would be a lot cheaper than drilling 600m DDH down in search of it??

MOD Price at posting: 35.0¢ Sentiment: None Disclosure: Held
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Hi John, bit of an off topic question for you and/or anyone else...

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