That burdens the economics of any development and makes the land less valuable than it otherwise would be. That means he will receive 4.5% of all revenues while not contributing toward any capital or operating costs. One factor reducing the value is that, according to the most recent 10-Q, the chairman of Torchlight holds a 4.5% royalty interest in a private company. The company has a 66.5% interest in the Orogrande project which they have been trying to market for some time. That leaves only their Orogrande project. They also sold their Winkler project for proceeds of $350,000. I'm going to assume this option gets exercised, as oil prices are up substantially since it was granted. They've granted an option to a buyer on their Hazel asset already for $12.4 MM, and I think it's most of the value. Prior to the deal announcement TRCH shares traded around $0.30 per share, and I think that's a reasonable guess at the value of the special dividend on TRCH shares. The deal seems largely designed to tap into current market enthusiasm for green energy assets. Torchlight holders will also get a distribution that will allow them to receive the proceeds from the sale of the oil and gas assets (or the rights to a spin-off of those assets). The arrangement specifies that Metamaterial holders will get 75% of the new shares, while TRCH holders will get 25%. The transaction is essentially a reverse merger, with Metamaterial getting a NASDAQ listing for their firm, which is a clean energy business, while Torchlight (a subscale oil and gas company) gets paid for their shell. Metamaterial ( OTCPK:MMATF) is merging with Torchlight Energy Resources ( TRCH).
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