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11/29/18

The obscene EMX Royalty (EMX) bonus payment; questions arising

After publishing on the news yesterday that EMX Royalty (EMX) had decided to reward its insiders and friends with $3.8m in cash due to the closing of a deal, the conversation over at Twitter turned to motives behind the deal and the payment. Feel free to check the details of the gig, but in the simplest of terms:
  • EMX held a minority part of copper asset in Russia for many years
  • A third party came along and expressed interest in buying it
  • The market was skeptical and didn't expect the deal to close
  • All went quiet for a considerable amount of time
  • Then in October EMX announced the closing of the deal and the main part of its proceeds, $65m, was delivered (there's another $4m left to receive, apparently) in November
  • The market applauded the unexpected result for EMX
  • We then got the out-of-blue announcement on the $3.8m in "discretionary bonuses" awarded to insiders and consultants
 Which brings us to the Twitter conversation ensuing and in the words of Per Nilsson, a guy who knows this sector backwards as well as having a better feel for the way in which dirty deals go down in Russia,
"Seems shady. External consultants in Russia getting large bonuses after a successful deal = red flag. Might as well be compensation for bribes that a consultant had to give away."
That sounds at the very least a valid issue. You close a deal on a property in Russia that the market didn't expect to happen and then all of a sudden cash is slushed around for those concerned. Therefore and as EMX is both Canadian and USA listed, we point readers' attention to this document, "A Resource Guide to the U.S. Foreign Corrupt Practices Act" published by the Criminal Division of the U.S. Department of Justice and the Enforcement Division of the U.S. Securities and Exchange Commission. Specifically, this section of the PDF:

 

IKN believes that the shareholders of EMX Royalty (EMX) deserve far more transparency about this deal. A sudden windfall juicy profit from a mining property in Russia that generates windfall cash bonuses that the company tried to bury at the very bottom of a ling-winded news release? Seriously, David Cole?