Post by
rbsanitation on May 27, 2011 11:11am
AEM is taking all QMI cash...
and so therefore what is left is a stock swap with NO cash, same think happened with Vault Minerals. It would appear QMI is now worth $15ish. Previously, the $11 to $14 target was simply too conservative as it valued the QMI cash in bank with pre NI 43-101 estimates which are now in. QMI's cash in bank position is about equal to AEM's! In the next 16 weeks gold will move into US$1,650 and in 40 weeks gold will climb into US$2,000 - $2,250 as the US$ finds its post QE price threshold. The AEM offer is now looking like a 2:1 deal because they want QMI's $90mm cash in bank of $90mm. A 2:1 values the transaction at $2.5B, based on current POG trajectory the assumption is there would have to be 10mm oz in the ground to pay and much more to make a viable 2:1 work and not get the AEM players hung. The deal is taking its time as the growth in NI 43-101 is the only thing AEM can justify the above price. QMI and AEM may have a deal cut but the triggers aren't being pulled, YET! One sticking point and the reason the deal isn't done has to do with the downward price move of AEM. At todays $64 it is well below the price when they negotiated with QMI delivering $35mm to step out a drilling program. In late October 2010 and early November AEM was marching through $75 into $90. The next leg up is near and with it AEM price should move into $80 and test $90ish, this will trigger QMI's stock swap into a 3 or 4:1 or $30ish dollars for QMI... effectively a mere double from where QMI is trekking today. Bottom line, AEM hasn't absorbed QMI because their share price is off almost 30% with the rest of the gold mining majors. The benefit for all still in the game the value continues to rise.