Because of what I had hoped would be some time off, I said I was not going to comment unless the situation was clearly newsworthy. Since OLE is a client and I now personally control over 2.5 million shares, my highly bias position makes this news quite worthy of comment.
I’ve not spoken to senior management in a few weeks and this is strictly my observation only:
It’s been my opinion that OLE was a takeover/merger candidate. One didn’t need to be a rocket scientest to come to that conclusion because its just about a year ago when the company first said it was playing in that ballpark. On the assumption that remains the case (they noted yet again in the most recent news event), this latest announcement was a prudent move in my humble and most bias opinion.
The junior resource market has been in the crapper for months, yet just a couple days before Christmas, the company managed to effectively raise money at or slightly above current share prices. They didn’t need to discount the price (which I suspect if it had been a regular financing we would have seen the stock and the agreed price at least 10%-20% lower) and they didn’t have to offer a warrant. This in itself was a nice surprise.
Having millions on the balance sheet to draw down on is a much better negotiating position than having empty pockets. I also think the fact it was Sprott as the lender/investor is a significant plus as they have clearly demonstrated they understand gold and the mining business and have been prudent in anything I’ve seen them involve themselves with. And finally, this is the type of deal you do if such a deal was not that far in the distant as its very little dilution versus say 10 million shares with a warrant and before the hold period was over those buyers get taken out in a takeover/merger.
My conclusion is OLE has acted properly and my vision of a takeover/merger remains valid. I do want to suggest to speculators players not yet shareholders, that with tax selling just about over, you may want to take a hard look at OLE ASAP
P.S. In just a short time since the hews was released, readers have emailed me comments that have already been made on a chat site about this announcement. From what little I read, those commentators know very little how this game works and they should sell their shares Monday (and I truly hope those speculators not yet shareholders use such selling as an opportunity to become a shareholder). I feel more comfortable about my position after this latest news