PEK 2.50% 19.5¢ peak rare earths limited

I don't think it's realistic to expect that, Novac - that...

  1. sjl
    1,194 Posts.
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    I don't think it's realistic to expect that, Novac - that implies that Peak "should" be worth a billion dollars, and I think you'd have to play pretty fast and loose with the figures available to date to reach that conclusion. (That's off the top of my head; always happy to be corrected if my memory is dodgy.)

    I've had a slightly closer look at the document. There are a few things that are still unclear to me, but the takeaway I get so far is:

    - Bridge loan: for up to $US3 million (15% interest means $US3.45 million repayable at the end - ballpark.)
    - Principle transaction: roughly $AU4.5 million gets them roughly 13% of the diluted capital of the company.
    - $US5.2 million gets them a 2% gross sales royalty. This will also wipe out the debt of the bridge loan - I'm not clear whether the bridge loan is paid back at this point (that's my initial reaction from my reading of the document), or if the bridge loan is closed off, with nothing to pay, when this deal is closed.
    - A $AU2.6 million convertible note gets them up to around 19.9% of Peak, if approved by shareholders. If not approved, they get 4.99% of Peak African Minerals (PAM).
    - Up to $AU14.1 million in PAM, gets them up to 37.5% of PAM. Combine that with 19.9% of Peak, and they effectively end up with over half of PAM! (37.5 direct, 12.7 through Peak.)

    Is it just me, or does this leave a bad taste in others' mouths as well? Yes, okay, they may not have been able to get a better deal, and it is better for us that the project move ahead ... but based upon my reading of the deal, it doesn't sound like it's maximising the return on our investment for us.

    I'd love for somebody to point out the flaws in my reading and reasoning here, I really would...
 
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