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Precious metals miner Sibanye-Stillwater has entered into an agreement with Regulus Resources, and its subsidiary Aldebaran Resources, to acquire a stake in the Altar copper/gold project, in San Juan, Argentina. Peregrine owns the Altar project.

Under the terms of the agreement, Sibanye’s wholly-owned subsidiary Stillwater Canada and Aldebaran, will enter into a joint venture agreement with an opportunity to earn up to 80% interest.

Mining Weekly reported that Sibanye states that the arrangement creates a “new, well-capitalised, Argentinean-focused exploration company”.

“This transaction is consistent with our strategy of maintaining our focus and investment on our core mining operations. We believe Aldebaran possesses the vision, skills and experience to unlock the considerable upside potential of the Altar project, in which we will continue to hold a meaningful interest,” commented Sibanye CEO Neal Froneman.

 

INTERVIEW WITH SANTIAGO SARAVIA FRÍAS AT SARAVIA FRÍAS & CORNEJO ABOGADOS

Please tell me about your involvement in the deal?

I was involved as the local lawyer of Regulus Resources Inc in Argentina. Our work basically consists in advising our client on the implementation of the Joint Venture from an Argentinean law perspective and performing a due diligence on Minera Peregrine S.A. (Sibanye/Stilwater`s Argentinean Subsidiary) and its mining titles in the Altar Project.

Being the mining rights the main assets of Minera Peregrine S.A., the most important aspect of our due diligence was focus on reviewing them to determine its good standing, whether there were encumbrances, private royalties, landowners claims/agreements, overlapping with third parties, agreements with San Juan Province, third parties claims, and the extend of the permits related to exploration activities like the scope of the environmental impact assessments approved, water rights, right of way to access to the project etc.

Why is this a good deal for all involved?

This is a good deal for all involved since with Aldebaran Resources – the operator of the mining projects -, the parties will benefit with all Regulus Resources’ successful past experience and technical knowledge. This will allow to further develop the Altar Project and hopefully carry it out to the exploitation stage. On the other hand, both parties will have interest not only in the Altar project in San Juan Province but also in others exploration projects like “Rio Grande” and “Aguas Calientes” located in Salta and Jujuy Province respectively, which also have the potential to add value to the new company.

What challenges arose? How did you navigate them?

The main challenge was to have the due diligence finished on time. Our client wanted to have a preliminary opinion on the main contingencies and on the good standing of the mining rights in few days, in order to decide whether to enter or not in formal negotiations. To accomplish this, I personally travelled to Mendoza Province where Sibanye-Stilwater’s subsidiary is registered to review the documents at their office and interview the local lawyers and officers. Then I went to San Juan Province and review in situ, most of the documents and files related to the mining rights and permits. Eventually we were able to give this preliminary opinion on time.

 

How does development finance work and what are the criteria? Below Gary Hemming at ABC Finance explains the ins and outs of project financing and development loans in the property sector and beyond.

  1. What is development finance?

Development finance is a type of short-term, secured finance which is used to fund the conversion, development or heavy refurbishment of property or properties. Property development finance can be used for a range of different building projects but tend to be used for ‘heavier’ projects, which require serious building works.

Projects which require ‘lighter’ works, such as internal refurbishment are likely to be better suited to a bridging loan.

  1. How does it work?

Development finance can be more complex than residential mortgages, with funds advanced upfront and then throughout the build.

Funds are initially advanced against the value of the site, with most lenders happy to advance up to 60-65% of the value.

Once the build has begun, further funds are released at agreed intervals, with lenders often willing to advance up to 100% of the build costs. In order to agree to each stage release payment, the site will be re-inspected by either a lender representative or monitoring surveyor. If they feel that works are being done to a high standard and there is sufficient value in the site to release the next stage, funds will generally be released quickly.

The reinspection and further staged drawdown are then repeated until the project is completed.

  1. How is the interest paid?

The interest is retained by the lender as each stage is drawn down, meaning there are no monthly payments to make. When the development is complete, the loan is redeemed along with any interest that has accrued.

This generally suits both the borrower and lender as cash flow can be difficult to mage during a build. As such, the removal of monthly payments makes the loan easier to manage for all parties.

  1. How much does it cost?

The rate charged will depend on several factors, with the main ones being

Larger loans of say £500,000 or above will usually be between 4-9% per annum depending on the above factors.

Smaller loans of say below £500,000 will usually range from 9-12% per annum however if the deal is strong you could pay around 6.5% per annum. Usually, lenders price each application individually.

In addition to the interest charged, the will usually be a number of other fees, the main ones are:

  1. Understanding the maximum loan available

Property development finance lenders use a number of key metrics to calculate the maximum loan, they are:

The lender will combine all 3 of these metrics to calculate the maximum loan. Where there is a conflict between the 3 figures, the lower of the 3 will be chosen to cap the loan.

  1. What happens when construction works are complete?

When the works are complete, the loan will generally need to be repaid. Often, people look to refinance to a term loan such as a mortgage or switch to a development exit product whilst the site is sold as this can be cheaper than the development finance, maximising profit.

The facility will be set up to last for only the build period, with a grace period to allow time to refinance or sell. Development finance should never be used as a long-term finance solution.

Paul Vick Architects recently won Finance Monthly’s Game Changers Awards 2018. They are a growing, agile practice based in West London. Their unique blend of skills and experience is backed up with a client-savvy world-view that sets them apart in their profession as does their 100% planning permission record on over 100 projects. The company’s Cambridge educated Director Paul Vick discusses the challenges faced by clients today.

 

What are the biggest challenges facing development?

Armed only with a commercial need, a strategic target, and an investment appraisal, risk and uncertainty loom large in the average construction client’s mind. Digital connectivity has laid bare how many different stories there are trying to make sense of the chaos of data and disordered world we work in. They have to stare through the fog of unknowns and lean on past performance, current valuations and economic indicators – any crutch, in fact, to mitigate risk. After all, huge sums of money are involved and whether they spend equity or take on debt, it all has critical implications for the wellbeing of their organisation.

And when the only constant is change, designing only for today’s conditions is a sure way to guarantee a sub-optimal solution.

 

What are the key issues clients face in relation to UK regulations and what are the incentives to encourage foreign participation?

Planning permission is a definition of viability – without it buildings don’t get built, investment is not forthcoming, and you are left with stranded assets. Stories of intransigent planners, vocal neighbours, mykfcexperience survey and delay are commonplace. Sometimes this is a result of an incomplete understanding of the process and the pressures planners face.

Our job at Paul Vick Architects is to confront uncertainty and negotiate remaining unknowns and trends intelligently in relation to the client’s brief. At the same time, we approach value from the start to enhance your business plans. The model we have developed addresses economic, use, identity, community, environmental and cultural values together to give opportunities for multiple users and positive feedback loops for your benefit. There is not much point in receiving planning permission for a care home, student hostel or hotel without enough rooms to make it viable for example.

The UK is known as being a structured and reliable environment to work for long-term interests – essential to successful construction projects.

The traditional distance of the developer to the user has become shorter. The public nature of development means users and neighbours have a louder public voice. They can be your supporters and market, and the developer seen as a catalyst for regeneration. An understanding of user needs is not just important to the planning process specifically, it is also important to the conception pre-planning and the physical detail delivery of it for user satisfaction.

For an office owner-occupier, that might mean design that attracts the best staff, encourages them to stay longer, work more productively and, ultimately, to make a more profitable enterprise. For investor-developers, that might mean private rented housing designed with a marketing cachet for cultural and social opportunities that commands premium rents, long leases and zero voids. For a museum, it might mean spectacular staging in and outside galleries themselves to create a destination powerful enough to attract people away from their screens.

 

Can you give examples where you have created value enhancement above client expectancies?

Apartments and Penthouses, London, UK. After some study, we agreed in a pre-application with the council that 100% increase in area would be acceptable. Previous consultants had thought only 25% was possible.

New Mini-Department Store, West End, London, UK. Our design increased the visibility of selected brands and improved the management and speed of stock delivery in store to boost client’s customers’ loyalty.

Daylight Studio, London, UK. Our design anticipated the client’s need to adapt over time to new media and alternative revenue streams, leaving them very satisfied.

Regeneration of a historic site with 7,000sqm of offices and retail, 80-bed care home, boutique hotel, low-energy homes, and museum, UK. The key objective is to design a destination to drive footfall, room occupancy, and sustainable client revenue.

Start-Up Hub, Innovation Warehouse, London, UK. Eschewing the trendy playroom motif, our fit-out supports growing, developing and selling ideas, and has nurtured several entrepreneurs who have turned into unicorn businesses.

Glass Bridge and Office Fit-Out for Global Communications Company HQ, London, UK. Our design crystalizes an identity that emphasises connectivity and facilitates idea-sharing.

 

What is your overall vision?

The magic needed to turn the faceless development appraisal with all its risks and changing parameters into successful ‘output’ value is understanding the various ‘input’ values. The examples above are about how user motivation and inspiration are harnessed - attracting them to come, stay, and return, as well as the word-of-mouth marketing will make the development attractive and relevant for longer. Focusing on the user is essential for any business.

 

Website: http://paulvick.co.uk/

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