RE: don't like it at all
.first of all its obvious that the market isn't overly positive ornegative on the deal as the stock is basically unchanged on the day(down a fraction as I type).
The market was very positive. Prior to the news coming out macro economic fears had dropped the share price the trading was halted. After the news release and trading resumed Largo shot back up into the green. Also there was a huge jump in volume. For Largo to have closed at par in this metals and mining sector that for the last six weeks and especially the last 4 days seen a contraction is very positive.
I think it must have come from Vinci who perhaps seeing the macroenvironment deteriorate so drastically the past month or so, decided itwasn't worth the risk to finance a $100 million venture at this time.
The metals and mining sector has retracted over the last 6 weeks, but the global macro fundementals have not changed and will not be changing for decades. The Asian world is not going to stop advancing especially now they are getting their piece of the pie that they have long been denied.
So, now we're back to square one - we DONT have any financing in placeyet. We only have an LOI (again) - just like the one Largo were workingon for the past 5 months. So, what, we wait another 5 months for thisone to (hopefully) close?
This difference with this letter of intent is that it is with major shareholders already invested in Largo. Because of the stake they have in Largo they know the company well which virtually assures this deal will be done. These investers already have a large stake in Largo and they did not bail because of the recent pull back in Largo's share price. They are putting in even more money knowing quite well the real value of Largo as a producing mine.
And if it does we get another 300 million shares dilution (give or take) to take us to 600 million or so.
Thenwhat happens? Do you know of a single other Venture Exchange stock with600 million shares outstanding that is successful?? I dont.
Successful Venture Exchange companies move to the TSX. It is not the absolute number of shares but the per share valuations that matter. The in ground metal value per share is huge and the financing will now unlock that value. That is why the financiers are putting up this money.