Prospekt has pretty accurately captured my reading of the contract. There is a distinction between being "positive" and being "commercially productive." To place Teck into a box we had to show it was both positive and commercially productive using the 12 % NPV. We didn't do that so (I think) we are in "in its sole discretion" land.

I also did a little research on how the "in its sole discretion" language could be interpreted. In some cases and in some jurisdictions (in the US, I didn't look at Canada) there is a duty of good faith and honestly imposed. That might help us if we can argue Teck should not be able to reject if it's "bankable" under industry standards even if it was not NPV positive at a 12% discount factor. But the cases also seem to say that the good faith and honestly duty cannot not contradict an express term of the contract. Here, the preformance of a 12% study removes Teck's discretion. I would think that a pretty decent legal argument can be made that that any study not falling within the12% "safe harbor" can therfore be rejected by Teck as not bankable.

I will add that this interpretation may explain the rather casual attitude CUU seemed to show in sending the notice to Teck. It really does not make much difference how long it takes to get the notice to Teck if Teck's decision whether to back in is at "its sole discretion." In fact, it would probably make sense to let Teck take as long as possible so that they can get comfortable with exercising their back in rights based on the economics. As Prospekt notes, it also explains why we don't yet have the Laird interests in our hands.

There were also some postings that question how CUU could make a produciton decisions without Teck. As I explained earlier, the contract allows CUU to give up on the Laird interests and just keep the 70% Participating Interests. I havent' seen the underlying docs but it seems to me that if the Laird interests are carried, then if the participating interests are willing to carry them, a production decision can go forward. As I understand it, that is basically what it means to be a carried interest. The problem for CUU is that it would have to finance the whole project and then collect Teck's share of costs out of production.

Finally, I will note that I would be very, very pleased to see Teck exercise its back in rights.

Regards,

Volpino