RE:Proper Valuation and exchangeThe long period of discussions between September 20 and December 13 must have been fragile. As reported, the original offer was for a 0.10 share exchange. On September 20, WWR closed at US$1.37 and CSPGF closed at US$0.107, or 14 cents Canadian. The offer of 0.10/sh of WWR (currency) reflected a value of about 16 cents Canadian, a premium of about 15% accounting for XE and rounding.
During discussions, the price of WWR fell below the NASDAQ required minimum of $1/sh for 24 continuous days. After 30 consecutive days of such, NASDAQ sends a "deficiency notice", after which WWR would have a period to cure. CSPG held steady between 12 and 14 cents Canadian during the same period. It would seem that CSPG could have used "Advantage Alabama" to better Westwater’s offer; however, it did not. Instead it accepted an exchange offer of 0.08/sh of WWR, 20% less than the original reported offer, resulting in a discount to CSPG shareholders rather than a premium
Why the weakness? The accepted offer also includes $2MM in cash to CSPG (not to shareholders). According to its last update, $1MM of this was spent in the last three weeks, I expect to satisfy unpaid invoices, catch up on unpaid salaries and to pull the ripcord on Don Baxter’s parachute. Clearly CSPG was beyond broke, and it’s tough to bluff when you have to show your cards, as you do during DD.
The good news, I believe - Westwater has yet to promote the graphite technology it is acquiring. Per the PEA, a processing plant can be built for $20MM or so to convert low value graphite amenable to clorination into high value tech products. In my opinion, this graphite doesn’t necessarily have to be sourced from high-cost Coosa, instead it might be procured from increasing low-cost supplies to the world market. Also, by removing Coosa from the equation, it might be done much more quickly.