Karora Resources Inc KRRGF

Globe says Sclodnick rates Karora Resources "tender"

[MVargas]

The Globe and Mail reports in its Friday, June 7, edition that Desjardins Securities analyst John Sclodnick, seeing an "asymmetric trading opportunity," raised his Karora Resources share target to $5.97 from $5.65, while maintaining a "tender" recommendation.

The Globe's David Leeder writes in the Eye On Equities column that analysts on average target the shares at $6.39. Mr. Sclodnick says in a note: "Since the announcement of the merger between Karora and Westgold, [Karora Resources] shares have traded in line with junior producers and have persistently traded at a discount to the deal price (currently 5.9 per cent) -- creating an asymmetric investment opportunity, in our view. Further, we expect WGX shares to outperform upon closing of the transaction in July as the combined company should rerate to trade closer to high-quality intermediate producers in top jurisdictions, helped by index demand. As [Karora Resources] continues to trade below the offer price, we would be buyers for the low-risk, near-term potential upside into the closing of the deal, but also for the medium-term rerate potential as we believe the [merged company] should trade at a premium to the intermediate producer group."

[MVargas]

As I write this Gold is barely above $2,300 and WGX.AX is trading at $2.295 which values KRR shares at $5.90 - an even bigger discount than mentioned in the Globe article. One of the reasons for the discount is the growing number of KRR shares shorted on the TSX.  An additional 3.5 million shares were shorted in the last 2 weeks of May - increasing the total shorts o/s to almost 10 million

[Rainman01]

I don't know what happens in this case besides they would have to cover a certain price maybe set by the institutions lending them the shares. I have a feeling we are in for a wild ride. We deserve the best out come considering what we have went through in the past few years. GLTA