Some have posted that we have lost on negotiating the 4X expenditures that Teck would need to commit based on the old 2002 agreement. IMHO, I don't agree, at least from an accounting perspective.
Note that under the old agreement $360M was to be committed by Teck based on ~$90M CUU fronted all these years. To clarify CUU would not be receiving this money. In exchange, Teck offered $60M to CUU. To clarify CUU would be receiving this money.
In essence, Teck would commit $180M by the time CUU would front up the $60M it received from Teck, basically $240M in total assuming a 75/25 ratio. That coupled with reimbursement of tenure acquisition costs, liard shares etc. makes the JV relatively close to the originally contemplated one.
Why the change in the JV agreement? IMO I think Teck does not want to be bounded to provide expenditures within a certain time frame. In exchange, they paid CUU a fair amount so that they can set their own timeline.
The JV agreement is great for Teck, but just as good with CUU. I think we are now liquid enough to remain a long-term partner or positioned to be bought out. I think once the market digests the news, we should be north of $1 soon.
Calvin
