Tan Range Exploration (T.TNX) is a unique, publicly-traded financial gold company whose business strategy is to acquire royalty interests in gold production from its core assets in the Lake Victoria greenstone belt (LVGB) of Tanzania where a reported 40 million ounces of gold have been discovered since the mid-1990's.
Tan Range is presently the largest landholder in the LVGB - one of the most prolific goldfields in the world. Established producers in this belt rank within the lowest percentile globally in terms of cash production costs.
Our royalty strategy offers investors significant, low-risk leverage to gold prices, limited shareholder dilution, and the potential to have their shares valued at a premium in the marketplace.
The Company's long history in Tanzania, the strategic location of its Lake Victoria properties, coupled with its strong in-house technical capability and capacity to identify and acquire high quality projects in a timely manner, distinguishes Tan Range from its competitors and provides an asset base for the Company's royalty strategy to unfold.
In actual fact, the Company's practice of farming out (optioning) its landholdings to qualified industry partners for pre-production royalties and direct royalties in future gold production positions Tan Range to receive a much higher market valuation than other companies in its peer group.
The Company's business strategy is a variation or hybrid of the one employed by Franco Nevada Mining which merged with Newmont Mining and Australia's Normandy Mining to form the world's largest gold producer.
At the time, Newmont paid 97 times annual 2001 sales for Franco Nevada, a premium that will certainly be used as a yardstick in future takeovers of royalty companies. Royal Gold, the only "pure" royalty play on the market, was trading at 32 times sales in June of 2003 and would likely be valued much higher in any takeover scenario.
Franco Nevada's strategy involved the purchase of production royalties on the open market whereas Tan Range intends to develop royalty income by way of property agreements with industry partners, most of them major companies. In essence, Tan Range believes it can find gold cheaper through exploration than buying gold reserves on the open market.
In order to exploit the potential on our holdings in the Lake Victoria region, we first define gold potential on the properties (in effect value-adding them) after which they are dealt to industry partners who meet strict internal selection criteria.
Entering into partnerships with major companies to exploit the mineral potential on our properties helps mitigate financial risk to the Company and its shareholders. This is extremely important given the cyclical nature of the minerals business and the Company's reliance on capital markets to fund its activities.
In our situation, the funding commitment for these properties is the responsibility of our industry partner which is usually a major company with the financial capacity and commitment to meet its long term obligations.
All of our property agreements are structured such that we receive advanced royalties before production and escalating royalties after production that are based on rising gold prices.
For most properties in our exploration portfolio, we prefer industry partners with assets net of liabilities of at least C$100,000,000 and gross annual revenues exceeding $500,000,000. Nonetheless, we have partnered with junior companies that are willing to advance our prospecting licenses on terms generally accepted by larger companies.
Because our properties are also prospective for diamonds (the historic Mwadui pipe of the Williamson diamond mine is located in the area of our core holdings), we have structured our royalty agreements to include diamond production as well. In the past year, we have also acquired a major land position in Tanzania's Kabanga Nickel Belt where Barrick Gold and Falconbridge Ltd. are developing a high grade nickel deposit.
At this juncture - and assuming the various royalty projects we have negotiated advance as expected - management of Tan Range expects that in the near future advanced royalty payments from our holdings will cover the majority of the Company's general and administrative expenses, allowing Tan Range to maintain a sound working capital position which has been the number one priority of its Chairman and CEO, James E. Sinclair.
More information: Tan Range - Tulawaka project.
Chairman, CEO & Director
Marek Kreczmer M.Sc.(Geol.), B.Sc.(Geol.)
Mrs. Victoria Luis MBA, CSCPA and AICPA member
Dr. Norman Betts, PhD, FCA
Dr. William M. Harvey BA, PhD,
Ulrich Rath B.Sc.(Hon), M.Sc.(Geol)
Rosalind Morrow LL.B
Corporate Head Office:
Tan Range Exploration Corporation
93 Benton Hill Road
Sharon, CT 06069
Telephone: 860.364.1830 860.364.1830