RE:RE:RE:RE:Endeavour pivots to exploration to shake 'M&A junkie' imagetheCurse wrote: marben100 wrote: Don't see why there should be unease about acquisitions at a time of high gold prices, when the acqusititions were made using shares (valued based on the same high gold prices), not cash.
Hi Mark,
I get what you are saying above and it really does not make sense as stated. However, in the case of EDV, I think TGZ was valued higher than EDV in November. ie overvalued vs EDV. EDV got slapped immediately and permanently.
And my anecdotal evidence is that it was the ****first**** time retail investors did not complain at all about the terms of the merger - meaing the company being taken over by EDV. Every other merger or aquisition had SH posters screaming about being ripped off. Not a whisper of that in November on the TGZ board. A happy lot.
Stocharts EDV vs GDXJ time will tell.
tC
As a former TGZ shareholder (and Yes EDV), I would say that we were a happy lot. But not really for the reasons you imply (that EDV overpaid - ie. overstated the TGZ merged value).
The thing to realize is that TGZ had just 5 bagged from $ 3 to $15 in 2019-2020. Truthfully TGZ did a good job of acquiring the Senegal property (Massawa) off of Barrick in 2019 - the real prize property in this deal. TGZ was farily priced at the time the merger was announced. EDV was likely under-valued at the time of the merger (perhaps still feeling the effects of the Semafo merger uncertainty). TGZ shareholders already felt rewarded from their own runnup, and did not make a stink about a non premium and the merger. Now with a 20% plus PoG drop, EDV (the combined entity) really seems undervalued relative to its peers and fair value...with no recognition of synergies yet to come (including their ability to drive down the AISC).
The article is an interesting acknowledgement, that while they were and are setting themselves up well for the future, they have paid a short term price. Too much, too fast? Perhaps. But the market forgets how good that both EDV and TGZ personnel are at mine execution, optimization, green field exploration, and resource expansion.
Once they start counting the vast piles of money they will be generating, and flowing the the dividends for multiple Qtrs to new investors on new exchanges, and experience a turn-around in the PoG, all this short -term angst will be forgotten....
At the end of the day all valuations are (should be) a function of (PV) all the future cash flows that the underlying company can & will generate. Getting back to that basics is another thing to look forward to. Although perhaps it will take another blow-off top and crash in the speculative markets, in order to get there.
I haven't added much, but decided to keep my traded in TGZ shares. Easy double in 12 months unless Gold crashes (which seems highly unlikely in this era of Central Bank printing.)
MM