From a business perspective, HRG is fully self sufficient - with or without the success of the Nord Gold IPO:
* HRG is driving out significant quarterly cash flows.
* essentially no (or very little) debt.
*
$125M in cash / cash eq (at end of Q3, 4 mths ago, should be higher now)
* HRG`s strategic investments has a collective value currently of about $103M (
now also unrestricted), but it is not out of the question it could grow to perhaps
$150 - $170M over the next 12 months
Here are the potential drivers:
1) Detour Gold - ``Detour Gold`s hike in reserves fuels takeover talk``
https://www.theglobeandmail.com/globe-investor/investment-ideas/detour-golds-hike-in-reserves-fuels-takeover-talk/article1892302/?cmpid=rss1&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheGlobeAndMail-Front+%28The+Globe+and+Mail+-+Latest+News%29
2) Pelangio is getting good exploration results in Africa
3) Goldrush just announced the acquisition of some new properties in Burkina Faso, which are likely outside of stranglehold reaches of Severstal control / tactics / managment
As I have noted before, I believe it is possible for HRG`s Cash / Cash eq / Investments to reach the
$350 - 400M range at the end of 2011 (prior to allocating dollars to build the Bissa Mine and to any type of major exploration initiatives (over and above regular exploration efforts)).
If the IPO fails then Severstal will be needing to raise cash elsewhere to reduce their debt. I would like to see HRG (Severstal controlled) management use some of HRG`s cash to acquire an additional near-producing property (with excellent upsides on both the exploration and production fronts). This type of transaction could add significant value.
I would then like to see Severstal put their (70% +) stake in HRG up for sale, to the highest bidder. Dangle it to the likes of Polyus, Kinross, Eldorado Gold, IamGold, Petropavlovsk, etc. HRG is now cleaned up, no debt and cash loaded, with plenty of upsides on both the exploration and mine development fronts. All of this has to be plenty attractive to all of these growth driven companies.
I think HRG would be such easier to sell than Crew Gold or their other assets. I think Crew Gold is surrounded by a lot of legal cases right now, which makes it much more difficult to sell than HRG. Also, I believe Crew Gold has a lot more operational challenges (and require much more injection of capital) than HRG at this time.
I believe the combined HRG Burkina Faso asset portfolio has the potential for 8 - 12 million ounces (Taparko, Bissa, numerous other licenses). Even though we have hardly even scratched the surface as yet on these licensed properties, we are already seeing 43-101 ounces show up at Yeou (82K), Ankouma (74K), Bouly (364K), Gougre (225K) and Zinigma (139K). This doesn`t even include the highly successful test drill program at Labola in 2005. HRG test drilled a 15 km mineralized trend in Burkina Faso. The results were excellent. The holes were drilled about 400 or 500 metres apart, thus that is why there are no resource calculations as yet. Labola is far away from Bissa and Taparko. Labola would be a separate mine operation in Burkina Faso for HRG, if they are able to successfully advance it further on the exploration and development fronts.
I believe Prognoz is a billion ounce silver potential project, with 700 g/t silver grade, with easy to access mineralization via adits through sides of mountains coupled with small internal shafts when necessary (versus deep / expensive typical underground mining). I believe Prognoz has the potential to be an exceptional mine, with a combination of huge scale, extremely high grade and easy to access ore.