Good morning, ladies and gentlemen, and welcome to the Dundee Precious Metals Acquisition of INV Metals. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Monday, May 31, 2021. I would now like to turn the conference over to Jennifer Cameron.
Please go ahead.
Thank you and good morning. With us today are David Ray, President and Chief Executive Officer Hume Kyle, Chief Financial Officer Michael Dorfman, Executive Vice President, Corporate Development and Nikolai Hristov, Vice President, Sustainability and External Relations. Before we begin, I'd like to bring to your attention the fact that we will be making forward looking statements during this presentation, which are subject to the forward looking qualification, which is detailed in our news release and incorporated in full for purposes of today's call. Certain financial measures referred to during this call are not measures recognized under IFRS and are referred to as non GAAP measures. These measures have no standardized meanings under IFRS and may not be comparable to similar measures presented by other companies.
These measures are intended to provide additional information and should not be considered in isolation or as a substitute for prepared in accordance with IFRS. Please refer to the non GAAP financial measures section of our most recent MD and A for reconciliations of these non GAAP measures. I'll now turn the call over to David
Ray. Thanks, Jennifer. Good morning, everybody, and thank you for joining us. Earlier this morning, we were pleased to announce that we've reached an agreement with INV Metals to acquire all of the issued and outstanding shares The DPM does not currently own in an all share transaction. We're taking advantage of a unique opportunity to consolidate current 23.5 percent ownership in INV and add a high quality advanced stage growth project to our portfolio It has the potential to add meaningful growth to our production profile.
This project fits extremely well with our core strengths And we believe there's significant potential for us to unlock value from this quality asset on behalf of our stakeholders. On Slide 4, we've outlined the key terms of the transaction. The acquisition is structured as a plan of arrangement whereby each of the issued and outstanding shares of INB The DPM does not currently own will be exchanged for 4091 of a DPM common ship. The exchange ratio implies consideration of an $0.80 per INB share based on DPM's 5 day volume weighted average price on the PFX Represents a 63% premium to the closing price of RMB on May 28. The implied equity value of the transaction is equal to approximately $132,000,000 for the portion not owned by DPM or $104,000,000 on a 100 We expect to issue 10,600,000 new shares for this transaction, which will equate to approximately 6% of BPM's common shares after the closing of the transaction.
We have voting support agreements in place with IAMGOLD, Which holds approximately 36% of INV's common shares as well as directors in certain offices of INV representing a further 11%. Together with the shares that DPM already holds, this represents approximately 70% of INDs issued and outstanding shares to be voted in support of the transaction. There are a number of reasons why we see this as a strong strategic fit for DPM, and we decided to move ahead The Loma Lager project is a great fit with the core strengths and unique capabilities where DPM has a proven track record of unlocking value. The project has similar geology, mining method and processing flow sheet to our Chelopech underground mine, which we developed into world class operation. We see significant potential to benefit the project with additional engagement with local stakeholders as was also the case in the initial stages of development for Adatepe, Which is now a highly successful DPM operation that enjoys strong support from local communities and Loma Lago will produce a complex concentrate, which DPM would be able to process at our Tsumeb smelter in Namibia or other outlets.
This transaction leverages our strong track record of developing Leading ESG solutions at all of our operations to unlock significant value. We're acquiring a high quality, low cost asset With the potential to add meaningful growth to our production profile at attractive valuation metrics representing 0.2 of the NPV In the feasibility study and $38 per gold equivalent ounce of reserve. This in turn has the potential to be highly accretive to DPM shareholders. And finally, the size of this transaction maintains our balance sheet strength and financial flexibility, allowing us to pursue additional growth opportunities and maintain our disciplined approach to capital allocation, which includes continuing the return of capital to our shareholders. With respect to timing, we believe that it is the right time to consolidate our ownership in the project following the submission of the EIS, allowing us to bring our depth of experience to the permitting process and to ensure close alignment with our process and standards.
I'd like to take a few minutes to elaborate on these points in a bit more detail. DPM brings a depth of experience to the project in terms of our strong track record As an environmentally and socially responsible company, when we commenced production at Adatepe in 2019, it became the first new mine in Bulgaria and the Balkans in over 40 years, a significant milestone we were able to achieve in large part due to our approach to engaging with our stakeholders and our commitment to the highest standard of environmental stewardship. Across our portfolio, our operations Had a significant positive impact on local communities, generating social and economic benefits, and we have developed innovative solutions to minimize our environmental impact. Our focus on innovation has also demonstrated our ability to unlock value as we have realized a number of benefits from implementing best in class technologies That have increased safety, lowered mining cost, improved performance and reduced our impact on the environment. We are excited to be adding this high quality project to our development pipeline.
Located in the Azue province of Ecuador, Loma Lager is an advanced stage project that has been designed as a top strategic project by the government. INB completed a feasibility study in 2020 and recently submitted an environmental impact study. Overall, we consider Loma Lager a very robust project given its potential to contribute meaningful low cost production growth to our profile, It's strong economic returns and its potential to be a leading example of how to develop an environmentally sound operation with a low carbon footprint. Based on IND's feasibility study for the project, Loma Lager has the potential to produce approximately 200,000 gold ounces per year in the 1st 5 years. The life of mine production is estimated to be approximately 170,000 gold ounces per year at a low all in sustaining cost of below $6.30 Loma Lager adds approximately 2,600,000 gold equivalent high grade mineral reserves to our portfolio, Which supports an initial 12 year mine life with strong economic returns, including a 28% IRR at a $1400 per ounce gold price.
Relative to other development projects, it is clear that Loma Lago offers significant scale with peer leading operating costs at an attractive valuation. As mentioned, we expect the deal to be accretive to our shareholders on a reserves per share and net asset value per share basis. It also fits well within our portfolio, adding significantly to our production profile and maintains our attractive cost structure. Finally, the size of this All Share transaction preserves our financial strength and flexibility. As we've indicated many times, we intend to optimize and grow our business in That is consistent with our capital allocation framework.
Following the transaction, we will continue to have a strong cash position and maintain our ability to pay an attractive quarterly dividend. We will be taking a disciplined approach We will be taking a disciplined approach to advancing the Loma Lager project, and we'll have the ability to minimize upfront Spending during the permitting process, while we prioritize engagement with local communities to ensure international best practices, And we also plan to explore additional optimization opportunities for the project. As well, we will work to secure an investor protection agreement With the Ecuadorian government prior to committing to making any significant capital commitments. To conclude, with this transaction, we believe we are Capitalizing on a unique opportunity to acquire a high quality asset for our portfolio that adds meaningful low cost growth production for an attractive valuation. We can leverage our core strengths and unique capabilities to unlock future value and while at the same time preserve our financial strength and our disciplined capital allocation framework.
Overall, we believe that DPM is the right company to take Loma Lager forward, Following many years of hard work by the INB team, we have the technical depth, the financial resources and the ability to deliver innovative solutions for the benefit of all stakeholders. I'd now like to open the call up for any questions.
Thank you. Ladies and gentlemen, we will now begin the question and answer First question comes from Cosmos Chiu at CIBC. Please go ahead.
Thanks, David and team. I guess my first question is on permitting here. Loma Larga, what used to be called Quim Secocha, It's been around for a long time. And so maybe can you talk about, I know the EIA has been submitted, But what's the timeline here in terms of the permitting process? What are some of the key Challenges in terms of the permitting process, could you maybe talk a bit more about that?
Sure. Hi, Cosmos. Hi, David. The permitting timeline is laid out in the feasibility study and Communications from INB has indicated that, that could be completed in this year in 2021. We think that's optimistic And it's going to be necessary to do more in terms of local engagement and engagement in country to be able to Run through the different concerns and look at potential solutions in terms of how we advance the project.
In our view, it could take up 2 years to permit the project, which moves the timeline for production back accordingly into the 2024 to 2025 window. We anticipate that the bulk of the concerns are going to be around water and that's going to be a clear focus for us. On the other hand, we do have a number of things that we'll be looking at as value opportunities, which will provide ESG centric improvements To the overall project delivery. I don't know if that answers the question Cosmos, if you had any other questions?
Yes. I think that's great. And I'm just wondering if in the past, have they tried to permit it in the past? Was it a case of kind of like Krumovgrad, where it was sort of in permitting limbo for a long time and then you came in and was able Change the flow sheet a little bit and then got it done. I'm just wondering if it's one of those situations.
I was never that close to Quinsicocca. So just wondering, was one of those situations where it was in permitting limbo for a long time and now you kind of come in and things have changed?
As I understand, INB did a good job of changing the initial approach. The initial approach was going to be an open pit local cyanidation option And change that to an underground asset with local treatment, which involved producing a flotation concentrate or 2 flotation concentrates For sale, so that part of the work is already done. And where INV has advanced the project is to the point where now the EIS has been submitted. And what we're now waiting for is for the formation of the group within the government, which I believe has been done and for them to reach out to us. And that will initiate a process Of going through questions from the government, community consultation and so on.
So we think this is a very good time For us to come into this
process. For sure. And then following up on that, David, So a big project that was permitted in Ecuador was Landin Gold FDN. Any kind of parallels that you can draw between You know, IMV and what the permitting process was like at Lundin Gold at FDN?
So it is a different province and therefore slightly different situation in terms of stakeholder engagement. What I would say is that the government indicated that it's important for foreign direct investment as part of their intent to take the country forward. And Our project is one of the top 5. And in fact, I believe the number 3 project in country targeted with the idea of generating So from that point of view, the parallels are that both projects were seen as important. In terms of what was necessary in terms of Stakeholder engagement, I think we're just starting that process now really.
What we anticipate is that there has been an accumulation Concerns around water and those will need to be addressed in terms of how exactly we intend to manage water on the project. We believe that will be the main focus.
Thank you. And then not so much Ecuador, but other countries, When companies try to permit projects in other countries in LatAm, IL-one hundred and sixty nine was something that they've talked about in other countries indigenous engagement. Is that something that we need to be aware of as well For Loma Lager?
We see engagement as fundamental to any of our projects. It's been the key to Adatepe. It was key to What happened with Namibia, so it's just one of the things that you can't avoid. So dealing with the stakeholders And can be a broad group, including indigenous groups, local communities, looking at what it is that the government in total sees. It's important to engage with all of those stakeholders and pay attention to what it is that where they have concerns and where there are opportunities.
Thanks, David. And maybe switching gears a little bit. You first put a total position in IMV back in October 28, 2019. Since that time, could you maybe talk about the process? What gave you more comfort in terms of today, making a 100% acquisition of the company?
So we've had a close engagement with INV. We've had an opportunity to do a couple of due diligence exercises. So we're very familiar with the asset. And I'm on the Board of Directors, of course, of INV and Nicky Christophe, who is going to be managing the next phase of activity Targeted out to stakeholders and engagement and permitting. Nicky is on the technical committee.
So we're very familiar with the project. It's just been a question of working to the point where We had a transaction which both parties were interested in taking forward. In the meantime, we've continued to de risk the project With the new feasibility, the new government coming into place and so on. So we felt this was the right time given the next part of the project is where we Believe it's so fundamental, the engagement with the stakeholders.
Yes. And David, following up on that, I guess, the total hold position that you made was at CAD0.40 per share. Clearly, a lot has changed, but gold price is a lot higher today. And as you mentioned in your presentation, David, you're still paying a discount For these ounces in the ground, but could you comment on the $0.40 paid back in 2019 versus the $0.80 Along with the premium that's paid today?
Yes, it's obviously a key question. Why do we think it's appropriate to pay a premium of this nature? However, it takes an amount of money to be paid to get people over the line, and we look at the fundamentals And it's very clear that this transaction is highly accretive in our view on a reserves per share basis and an out per share basis. So I've given the numbers in the presentation, so I won't repeat them. But if you had any particular questions, happy to do that.
And the other thing is that we see Upside potential in Loma Lager. And we believe it just fits with our core strength. So therefore, this is obviously A very important consideration internally as well. The first $0.40 payments, I think the second was at 0.45 To get to our 23%, 23.5% share. So, yes.
So that's why we believe that it is highly accretive. And as a consequence, we were able to get over the premium that we were paying and focus on the value of the project to DPM And last
year. Great. Thanks, David. Those are all the questions I have. For now, I'll get back in the queue.
Thank
you. Thanks, Cosmos.
Thank you. Next question comes from Lee Hua at Scotia Capital. Please go ahead.
Hi, good morning. Thank you for taking my question. Actually, most of my questions have been answered. But maybe just one follow-up on the Community concerns you were talking about, do you think the key to working with the local community is just Education and outreach, or do you envision needing to modify the project? And Along those lines, is the project flexible in terms of being able to modify it such as what you did with Adatepe?
Good morning, Lee. So the project has already been modified in a significant way, which we believe should go a good way towards Whatever is necessary with the communities. You talked about, is it necessary to educate? So I wouldn't so much say educate as we need to be ready to inform, So that when we're having a conversation, we're doing so on a basis of understanding what it is that is offered from the project and how it is that we're going to manage any impact. The first thing I think we have to do is listen.
So it's very important that we understand the concerns. So rather than just go in and talk about good the project is, we should be hearing, okay, what are people's concerns and how that will impact livelihoods and other elements. So the process that I mentioned, the EIS has been received. We're waiting now to commence the to and fro with government and then the Community consultation, where we'll get the opportunity to hear what it is that the communities have concerns over and How it is that we may be able to address these? I believe that a large part of those have been addressed and it's just important to understand the nature of some of those other elements And consider those.
So we will be optimizing the project. We're going to take the opportunity to do that, while we're going through this permitting process. And it's quite possible that coming from the process itself and the outreach with the communities that there will be things where we realize there are opportunities to improve. As I mentioned, we're committed to the highest standards with environmental, but it also includes the engagement of stakeholders and making sure that we understand Where it is that they see opportunities, where it is that they have concerns and doing what we can to address those.
That makes sense. Great. Thanks.
Thanks, Lee.
Thank you. Next question comes from Don DeMarco at National Bank Financial. Please go ahead.
Hi, David. Does this mean that you're done with M and A and you feel comfortable that you provided an adequate bridge beyond the limited mine life at Adatepe?
So I mean a few different things. We've been accelerating our exploration activity with an intent to extend the lives of our existing assets, particularly Chelopech. Does this mean that we've done? That depends on how this project progresses. We would be open to opportunistic activity on Acquisitions or investments.
This basically preserves our ability to do that. But we're very as you know, we're very focused on our capital allocation. So that includes reinvestment, margin improvement projects, exploration, then the possibility of M and A. We're not done with M and A, but it would be a part of the toolkit. This preserves our ability to do that.
But obviously, we're very intent on taking this project forward. It does make a meaningful difference to the company going forward.
Okay. Now, Todd, you spoke about water and some of The permitting topics and so on, and we saw a few months ago that mining had been banned in the Paramo ecosystem near Cuenca. But can you speak to the how the project Has grandfathered exemptions to this? Obviously, in acquiring it, you would have felt very comfortable about those exemptions.
Yes. So and the first thing is, there was a ruling by the Supreme Court that projects that have been moved forward historically will be grandfathered. You're Correct in saying that. We believe that this should not affect the recharge areas of the specific Rivers that were the concern. However, we are very focused on our projects of making sure that we act In everybody's best interest in terms of what we need to do with energy, energy efficiency, greenhouse gas emissions, all of the other Sort of climate change sort of parameters and water is one that is a real touch point.
So we'll be making sure that we do what we can to minimize our footprint. We're not going to rely on the That we've been grandfathered. We'd like to think that it's not just a case that we'll forget about that. We've done what we need to. We want to make sure that that relationship is constructive.
We understand the concerns. The government
has yet to do We understand the concerns. The government has yet to do some things which will clarify the recharge area. So we're not reliant on that at the moment. We'll be continuing to act in what we believe is the right approach to management of water around this project.
Okay. Your slide deck indicates that the project is designated as a strategic project by the Ecuadorian government. What does that mean?
So what it means is that a project that's targeted to be a part of what's going to happen with foreign direct investments and how that might impact Economically on the country, locally in terms of jobs and supply chain and other things. And I think More globally as to what that's going to do in terms of the additional taxes and revenue that will come in from the project. So it's targeted within that framework as one that will make a meaningful difference to the country.
Okay. So does that Can we take that to imply that there are groups within the country that are very supportive of this project and potentially provide some offset to those that are May have environmental concerns?
Too early for us to say that. So what we need to do is get more into that conversation and we plan to do that Over the next couple of months as we're working through the EIS with the interested parties, stakeholders and the government.
Okay. And so from a modeling perspective, how much Do you expect to spend on the project in the next year on permitting or maybe some exploration or whatever else you might need to spend?
Don, we have a view on that, but what we indicated is that we've got a process going on to review that. And I prefer to Come back to you when we have the Q2 close. Michael, is there anything that you wanted to add to that from our side?
Yes, Donna. I think
the expectation from INB over the balance of the second half of the year was budget of CAD15,000,000 to CAD20 1,000,000. So we'll be taking a close look at that To see how that might change under our ownership, but we'd be looking to minimize The spend during the upfront permitting phase.
Okay. Okay. Thanks so much guys. Congratulations. That's all the questions for me.
Thanks, Don.
Thank you. Next question from Dalton Baretto at Canaccord. Please go ahead.
Thanks. Good morning, David and team. I want to start by asking About the stated rationale for this transaction, you mentioned similarities to Chelopech. You mentioned early engagement with stakeholders and you mentioned the ability to place the complex con at Tsumeb. Can you kind of ballpark wrap that up for me in terms of potential economic impact to the project?
I'm trying to compare That versus the premium paid as well as any impact on a delay to the feasibility study?
Sure. So I mean, if you go from the feasibility study where we talked about $216,000,000 of initial capital, dollars 71,000,000 Sustaining $454,000,000 NPV and a 28 percent IRR. So we look at the project and we say, okay, is there anything that's going to be missing from this in terms of CapEx, are there additional items that we're going to bring? And then what are the mitigating items? So for instance, it's not just that this is a similar type of ore body in terms of How we would go about the extraction of the resource and reserve.
It's also the fact that we have So many things that we've identified with Chalopet, which are synergies beyond just a single asset. So for instance, we've got a smart center at Chalopet, which has the ability To do the planning, it already does so for Adetete, could do that for 3rd party or current 3rd party in house after this transaction. So if we build the IMV Loma Lager asset, one of the things that we could do is we could get synergies from the provision of HR, supply chain, planning, scheduling, maintenance, we got all sorts of things that we can do with our expertise in terms of The availability of people during the development of this project and the development of all of the sort of skills That we will need to bring everybody up to the performance opportunity for Loma Lago. We can actually utilize, Leverage our strengths at Chelopech and at Ottepe with this asset. So things like that.
We've also got, for instance, The opportunity to implement alternative types of fleet at the moment, it's been busy that that would be a diesel fleet. And actually, Loma Laga was Considered to be the place where there could be an electric fleet. And at the time that was rejected as an option. We believe that's still something that's Very viable. And again, that gives us an opportunity given the remote control to be able to do more from our existing facility.
So there are many different areas just Looking at it from a mining point of view, you can reduce some of your overhead, you can leverage the expertise that we have to bring people up to A performance objective that's going to allow us to realize more value from that asset. So I would say though, As you mentioned, we'd obviously be looking at the current capital expectation. There's potentially going to be some creep on that. But at the same time, we're looking to offset that with the Opportunities that we might bring from our experience of building these projects plus the leverage that we've got from our other operations. There's much more that I can say on this, but maybe I'll stop there, Dalton.
No, that's great color, David. Thank you. And so then is it your intention post the deal to refresh the feasibility study to incorporate some or all
of this?
Or Are you just going to move forward with the current feasibility as the base case and optimize on the fly?
We do want to basically move forward with the existing feasibility and optimize it on the fly. As I mentioned, we haven't really Started the engagement as part of the EIS. So there is going to be some need to come back and revisit some of the elements, some of those baseline assumptions In terms of what we're doing with the construction and operation of the project. So what we'll do is we'll go ahead and trigger some optimization studies, Which we already have some in mind. There'll be more over the course of the next 6 to 8 weeks.
And then we'll take that into the conversations, the They call the engagement and then from that we'll come up with what may be a review of the current Feasibility study, but at this point, I would say we're progressing with the feasibility study unless we see something significant that requires us to restate that.
Okay, thanks. And then we've talked a fair bit about permitting in the Q and A here. But maybe just one question for me and perhaps you've already answered this in all your Commentary. But the feasibility study says that the mining concessions lie within protected forest areas. And so does that mean you'll need a special exemption from the government above and beyond what would typically be considered a permitting track?
So it's not unusual for us to have assets which are in protected areas. So if you have a look in Bulgaria, for instance, in the Natura 2000 Zone in which we built Adeltepe. So that's not unusual for that type of thing. Nicky, did you want to comment On the view in terms of how that's considered?
Thanks, Dave. So No, there will not be any specific other than the sort of the normal Permitting regime, the mining activities in that type of Protected area is allowed and it won't be different to what we have done in the Datapay Mine where we put a special biodiversity plant in place to manage the biodiversity The aspects of the protected area. So, we have a good experience in dealing with such type of things.
Okay. Thanks for that. And just maybe two quick questions on Equidar. First of all, My understanding is that the current regime in Ecuador states that the government must And then when I look at the feasibility study, it basically states that based The commodity prices assume there, there's no adjustment payment triggered. Would that payment be triggered at current commodity prices and have you factored that into You're asking it?
We factored in the current requirements. Michael, did you want to talk to this?
Yes, I don't believe that the There would be any adjustment at current commodity prices, but we can come back to in terms of sensitivity at what point that, that Comes into play.
Okay, great. And then just maybe one last one on the investor protection agreement you guys are going to negotiate. So is it fair to assume that what you're going to try and do is lock in the existing royalties and tax payments and
that sort of stuff? And then
in terms of a dispute resolution mechanism, is it fair to assume that would just be your typical international arbitration?
Go ahead, Michael.
So yes, the question is on the Investor Yes. So we would be looking to that process is actually well underway. INB has started engagement on that process. And we expect that there's good opportunity to actually Get that completed over the course of this year as you outlined.
And you're looking to lock in the current terms?
Correct.
Correct. Yes.
Okay, perfect. That's all for me guys. Thank you.
Thank
you. Thank you.
The next question is a follow-up from Cosmos Chiu at CIBC. Please go ahead.
Hi, David and teams. Sorry, just have two follow ups here. I guess, number 1, David, as you talked about similar geology and processing Here as it is to Chelopech. So in your economic analysis for this acquisition, was it considered? And what might The cost savings in terms of shipping your concentrate from Loma Larga to Sumit?
I wouldn't consider that to be a saving. The way I would look at that is the same way we look at it with Chelopech, where it's an ability for us to have a home So there can be situations where it changes in governmental with the place where you're shipping it, where they restrict or have more onerous requirements in terms of the delivery of that concentrate. It just means that We've got a confirmed home for that concentrate at Tsumeb. So it wasn't so much an optimization as making sure that we can place that concentrate with the associated Gold value.
Yes. You're right. That leads in well to my second question as well just to confirm because in our Q1 sort of discussion, David, we talked about the fact that It was actually a bit more efficient for you to play some of that Chelopech ore at 3rd party smelters versus Tsumeb. And so I guess that was considered as well?
That's correct.
Okay. And then the second question here, following up on the M and A Strategy here. Today, you acquired 100% of a total position. You have other 2 toad hole positions in Velocity and also Sabina. Any kind of read through from today to those other investments That you can comment on?
So Sabine is a great asset, but I think as we've said historically, it's a large asset And it is not one which is a direct fit with our core strengths in terms of underground mining, small high grade open pit is not a fit, also Arctic Location. However, it is a terrific project. So at this point, we retain that position. We're supportive of management. In terms of the way they're taking Sabina forward, the asset forward.
In terms of velocity, velocity is obviously 40 kilometers away from Adatepe. And it's an early stage opportunity for something that could be treated at Atatepe. So that's the reason why we're there. It's 20 kilometers as the crow flies, 40 kilometers by road. So we're continuing to look at that asset with a potential interest As a supply going forward, either in partnership or with potential ownership of that project.
It's early days on that. I would say between the 2, obviously, velocity is more of a strategic fit with the organization.
Great. Thanks, David. Thanks again for the answers. And I think those are all the questions I have for now this time. Thank you.
Thank
you. Thank you. Next question comes from Barakat Berhe, Beacon Securities. Please go ahead.
Congratulations, David. Most of my questions are actually answered, but I have one last question on M and A and this is probably outside of Your control anyways, despite the uptick of you paying 63% premium, this is a relatively small transaction. If you look at it From U. S. Dollar point of view, it's probably $80,000,000 for whatever shares you do not own.
And I noticed that the break fee is so small about 4 point $5,000,000 And given the quality of the assets and the amount of gold equivalent resource, you're Literally paying somewhere around $20 per ounce in ground. Do you think the break fee or the premium itself incentivize somebody else From making a bet for this asset?
No, it's not really the reasoning for it at all. Keep in mind that There was a 35% shareholder in this organization and others who we needed to get over the line. So at the end of the day, there was this is not the first conversation that we've had. This Process has been ongoing in phases over time. And this was what was necessary.
This was the sweet spot in order to complete the transaction. You're right. At the end of the day, we looked at this and obviously our investors would prefer a no premium Activity, if at all possible, and that was not possible in this case. So what we did then was rationalize exactly as you said, that is this acceptable As an investment, it was 5.5 percent of the future company in terms of the scale of the transaction, just a little over CAD100 1,000,000. And we stand to the conclusion that it was going to be accretive on a net asset value basis per share.
So and as a Consequence, we decided to move ahead.
Okay. And then, Yves, well, I think you misread my question. I was thinking that the premium was not sufficiently large enough to dissuade others from making a bid.
So, do you want me to answer that one? So sorry, I misunderstood your question. So we basically have It's necessary to get 66.2 thirds percentage points of the shareholder meeting for IMV and then follow that up with A majority, which is a 50% plus one vote for the group excluding DPN. And currently, we have locked up 70% Of shareholders. And if you basically take IAMGOLD plus people inside INV, we're beyond mid-fifty percent when you exclude DPM.
So we believe that's a very strong position. So is it possible that someone else may try and approach this? Of course, that could always happen. We did not position this With that in mind, and the break fee by the way is 3.5%, which is not unusual for this type of transaction.
Thanks and congratulations again.
And you had another question?
No. They're All lines are to be honest with you, but like if you could comment on the new President in Ecuador and You know, the sort of tone he's setting for the industry and also I noticed he appointed a new Mines Minister as well as a new Environment Minister, both of them Affiliated to the mining industry or lease exploration industry. And I was wondering if that's a signaling coming The President's office and your interpretations on that.
Well, we certainly think this is an exciting start for Ecuador with the New governments and the relationship that's been required to form a government, it's an interesting coalition. More interesting still, The President of the National Assembly is actually a Pachapic member, Guadalupe Iores. So we think this is really interesting. It's clear that the government is going to be challenged to do something after COVID To revitalize the economy and we'd like to be a part of that. What's happened so far is that the President has made a couple of statements About what he envisages, but I think it's still early in the formation of the new coalition.
And we're looking forward to hearing more about the plans. At this point, we believe that the progression of Loma Largo is one of the things, as we mentioned, it's strategic in country. We believe that that's still Part of what's required, supporting Ecuador moving forward.
Perfect. Thanks.
Next question is a follow-up from Dalton Baretto at Canaccord. Please go ahead.
Hi, Dalton.
Just one question for me here. Once the deal closes, David, if we assume, let's call it an 18 month delay to permitting, How should we think about sequencing, Loma Largo versus TMOG?
So we have the ability to build both projects. So we've looked at this From a point of view of the ability to finance both projects and we can do that. So we don't have to sequence the projects. So we have flexibility in this. So if both projects have the capability of moving forward, you understand that the Serbian Senior leadership within government has expressed an interest in making that project happen faster and doing What is possible to make sure that the timeline is tight in terms of the permitting process.
So I would hope that that's going to be the same in So therefore, there's going to be an expectation that we move at the pace that the projects can progress. So that being the case, we did look at this thing and took into account our expected future cash flows and what would happen in terms of that cash balance. The future cash flows and what would happen in terms of that cash balance, both for the current projects and also something that may be a little more optimized. So we've taken all that into consideration and we have no constraints in terms of our cash flow and the ability to build both projects at the time that they're ready to be constructed.
Got it. So you'd have no issue going forward with 2 construction projects and kind of 2 separate continents?
No. Perfect. Thank you, guys.
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