production

development

exploration

Disclaimer

Newsletter #23

Our website uses cookies. By browsing our website, you agree that we can use cookies as described in our Privacy Policy and this cookie notice. [Disclaimer | OK]

On October 21, 2013, Solid Resources announced a definitive and exclusive Co-operation Agreement with Glencore. The TSX Venture Exchange granted approval on October 25, 2013. This strategic partnership is a major step towards the advancement of the Cehegin Iron Ore Project into production.

The Solid Resources/Glencore Agreement - FAQ’s

1. What is the structure of the agreement?

Under the terms of the agreement, Glencore will hold a 20% interest in the project, while Solid maintains an 80% interest. Glencore can increase their equity stake at the discretion of Solid going forward. Glencore will exclusively purchase all of the production, which is based on an industry standard offtake agreement. If required, both parties jointly may pursue third party financing.

2. The agreement also mentions that dilution of the non-funding partner will be at fair market value, what does this mean?

In the event one partner wishes not to fund a certain stage of the development of the project, the other co-partner may finance this phase in exchange for a larger equity position in the project. The ability to purchase the other co-partner’s interest can be based on:

A fixed price
A discount or premium to fair market value
A formula price
Fair market value with no minority discount or majority premium

The agreement is for “D”. The Management and Directors of Solid felt this option was in our best interest.

3. The agreement calls for Glencore to purchase all of the iron ore produced at Cehegin, what are the terms of this arrangement?

Glencore will have the exclusive right to purchase all of the material produced for the life of the mine. The terms of the arrangement, called an “off-take”, are confidential to Glencore and to this agreement. This confidentiality is standard practice in the competitive environment of globally trading commodities by all trading companies. Like all of these agreements, the buyer (Glencore) will receive a discount to the spot market price, in exchange for marketing and selling the ore worldwide. Solid Resources sought out very experienced third party advice in negotiating this arrangement. What we achieved is most definitely an industry standard agreement, which will be very profitable to the Company.

4. Selling a commodity internationally and actually getting paid can sometimes result in non-payment or funds being slow to arrive. How do you know that this will not be the case in this agreement?

Glencore, is the world’s largest commodity trader. They are a multinational corporation with over 90 offices in 50 different countries. In the history of Glencore, they have never reneged on payment for an offtake agreement. Simply put, their reputation in the international marketplace precedes them. They only deal with reputable buyers. In addition, Glencore are world renown for their expertise in land and sea logistics.

5. Did the Cehegin project attract other interested parties? If so, why did you go with Glencore?

There were several very interested parties, which due to NDA’s being in place, we cannot name. Solid was looking for a strategic partner that could offer expertise in mine development, marketing, logistics and financing. A few of the other companies had this to offer, but none had the broad depth of Glencore. Last May, when Glencore, the world’s largest trader merged with Xstrata, the world’s 3^rd largest miner a very dynamic entity was created. Xstrata has experience mining in Spain, and feel it is good country to conduct mining in. Glencore were also very active to pursue the project with Solid. In fact, Solid’s management and technical team met with Glencore’s team on the project about three weeks after being introduced to the project last February. A lot of preliminary due diligence on the historical drilling and production data has been shared by Solid and Glencore during the previous 6 months.

6. If Glencore has the analysis of the historical data, why are the two companies conducting joint due diligence now?

While much is known about the potential of Cehegin on a preliminary basis, the agreement calls for a joint due diligence report to be completed. Glencore’s corporate due diligence additionally requires evaluating political, social and economic issues.. This report will assist both sides in establishing the next phase of the project - the Scoping Study. Both parties are working on the “official” due diligence report now and expect this to be complete prior to years end.

7. What will the Scoping Study phase look like and when will it start?

Jointly, each company will conduct some parallel deep drilling to establish how far down the ore body goes. It is important to remember that the original operators of the mine, Altos Hornos de Vizcaya (“AHV”) only drilled to depths of 30 meters to design open pit operations. We do know that they drilled several holes to depths of over 200 meters, intersecting layers of magnetite all the way to depth. We want to establish new reserves. Additionally, we want to make the historical reserves NI 43-101 compliant and complete a Scoping Study. We anticipate starting this phase in very early 2014.

8. What are the next phases after the Scoping Study?

Jointly, we would do a pre-feasibility and feasibility study, leading to the construction of a 1 million tonne per year operation.

9. What is the estimated cost of all of the exploration?

Approximately $4 million.

10. What is the Capex on the plant and how long until it is in production?

Capex is estimated to be $60 million for a 1 million tpa operation. Due to the world class infrastructure in place (rail, toll-free highways connecting to the Port of Cartagena 104 km’s away, water & hydro on site) $60 million is a very low Capex compared to many other projects out there. We would expect to be in to production in 30-36 months from now.

11. How will Solid finance their 80% of the project?

We will look to the market for equity financing for our initial 80% or $3.2 million. Once the project has been given production approval we will be sourcing traditional debt structured project financing. The agreement also calls for Glencore to assist Solid in obtaining third party financing throughout the upcoming process events of exploration, pre-production, construction and operations.

12. What about obtaining a mining permit, isn’t Europe a difficult place to deal with environmentally?

Spain is considered the best jurisdictions in all of Europe for mining. Spain has a long history of mining going back to the Roman occupancy. Spain understands it economic woes and is very proactive about correcting this situation. In fact, it was just announced on October 24^th that Spain has emerged from a recession. The Region of Murcia, where the Cehegin project is located, has a rich culture of mining. The fact that Cehegin was as producing mine that is going to be re-opened has created a lot of positive attention in the area. The company knows that the project is subject to compliance with numerous laws and must obtain the appropriate licences and authorizations from the mining, environmental and local authorities, as has always been the case up to the present. Solid is aware of its responsibilities, from the onset of the project we have fully reported on the steps being taken to all those possibly affected by the project. We currently enjoy a good and frank relationship with the community and the region.

more news

current video Association Support group Publishing house

no video selected

» change to channel

U.S. Gold Corp. Announces Acquisition of Orevada Metals, Inc.

Transformative transaction brings 2nd promising NV exploration project to USAU ELKO, NV, September 11, 2019 – U.S. Gold Corp. (NASDAQ: USAU - https://www.c …

read more

TerraX Extends Gold Mineralization Another 600 Meters In Phase 1 Of Drill

Vancouver, B.C. – TerraX Minerals Inc. (TSX-V: TXR; Frankfurt: TX0; OTC Pink: TRXXF - https://www.commodity-tv.net/c/search_adv/?v=298857 ) is pleased to anno …

read more

Latest Video

Jervois Mining: Idaho Driling Impressions & Project Flyover

Create own channel

Please click here to be forwarded to the channel registration of Germany-TV.