OTCPK:DRLDF - Post by User
Post by
R_J_on Jun 25, 2018 11:44pm
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Post# 28227874
Don’t Sell Yet
Don’t Sell YetThe release of the new feasibility study - which increases our value considerably - may invoke a competitive bid.
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I just got the following alert from my International Speculator Newsletter.
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Hold Takeover Target Dalradian Resources
Dear Speculators,
Our Golden Runway pick Dalradian Resources (DNA.TO) got a lift last week when it announced the signing of a takeover deal with private equity group Orion Mine Finance.
The agreement would see Orion buy the majority of shares in Dalradian for C$1.47 per share.
The buyout is all cash.
That amounts to a valuation of C$537 million. That buyout is a little on the low side, given Dalradian’s sizeable Measured and Indicated mineral resource of over 3 million ounces at the Curraghinalt project in Northern Ireland—especially since that resource comes at a very high grade of 15 grams per tonne.
That resource is forming the basis for a new feasibility study at Curraghinalt.
A December 2016 study estimated the project’s net present value at C$402 million—and at the time, Dalradian had only identified 2.1 million ounces in Measured and Indicated resources.
Given that those mineral resources have increased by over 47%, it’s likely the updated feasibility study will demonstrate a value in excess of the C$537 million Orion buyout price tag.
That said, Dalradian’s share price slid to a 12-month low of C$0.90 last week—where the market was valuing Curraghinalt at just C$320 million.
So the Orion buyout is coming at over a 60% premium.
Like it or not, it looks like the deal is probably going ahead—with major shareholders, including management and fund investor BlackRock, having signed on in support.
There is a possibility a competing bid could come, but that will be hampered by a clause in the Orion agreement, requiring Dalradian to pay a C$20 million fee if it dumps Orion’s offer in favor of a superior one.
Even if the Orion offer stands, it’s a good outcome for us—giving a current 82.5% gain from my open price of C$0.80.
There’s no harm in holding on the off chance that a superior bid comes in, so just sit tight for now and let’s see what the next few weeks bring.
Sincerely,
David Forest
Editor, International Speculator