Post by
StocksLynx on Jun 25, 2014 2:18am
There will be no financing deal which leaves less than $.50
Dunham (CEO of Geologix) holds 2.5 million shares he bought between 2005 and 2013
at an average price of $.255. $.59 was the highest he payed for a share within the last three years. You can look it up at sedi.ca.
I think it is reasonable to think that he would not agree to any financing where he would get less than that.
I would rather expect that any deal where the value per share would be below $.50 would be just unaccaptable for Dunham (and other shareholders).
This is the reason why Geologix rejected several offers to finance and is actively looking for an offer with a reasonable effective interest rate.
The NPV at a 7% Discount Rate (Post Tax) at current(!) prices for Gold and Copper is about $250 million.
This means if we would get financing with an effective interestrate of 7% per year the value of the mine would be $250 million or $1.54 per share.
So let's imagine a worst case scenario where financing parties would get an extra profit of $170 million (!!!) on top (!) of the 7% interest rate that would mean that the real value per share go to $.50.
However, this worst-case-scenario also leaves out the blue sky exploration potential and any appreciation in the price of Gold and Copper.
So as crazy as it is, in two years from now everybody looking to the share price would wonder why he did not buy Geologix while the share price was around $.10 or $.20 seeing that it went to $.50 or even $1 within one or two years.
But keep in mind it can take 12-36 months from now until share price reaches its true value but it might go far higher if explorations is successful and Gold and/or Copper goes higher which is both very likely.