RE:RE:New Press Release - Sabina Gold & Silver Announces Financial Results for the Year Ended December 31, 2022
Mack100 wrote: And right there, in the year end financial report, is this statement:
"In addition to Back River, Sabina also owns a significant silver royalty on Glencore’s Hackett River Project. The silver royalty on Hackett River’s silver production is comprised of 22.5% of the first 190 million ounces produced and 12.5% of all silver produced thereafter."
I thought that was completely irrelevant? Hmmmm...!!
What happens if silver goes to $50, which is the direction it is headed - does anyone really think that Glencore isn't going to look very seriously at advancing Hacket River? It may not be tomorrow, it may not be next year, but surely it is a legitimate future prospect that should have been reflected in the bid.
You really don't have a clue as to how M&As are typically handled, do you? Perhaps you are not as clueless as BaldSilverHead, but you're a contender in a race to the bottom on this BB.
If one is investing in the common shares of a company, that person should not only be very familiar with how the industry works and how to read financial statements, but also be able to add a little common sense and an objective assessment of the assets of the companies they own or are considering owning along with how possibilities like M&A transactions actually work should they come to pass.
For example, when a takeout offer is recommended by the BOD, shareholders should already know about the assets held by their company, their potential, a ballpark realistic assessement of their current value, etc. It is not the job of the company to babysit shareholders and provide a laundry list of any and all assets it owns at this point - you as a part owner in the company should already know that, or if not, search the company's website or SEDAR filings to find out.
A recent example: Do you think when YRI's BOD recommended the PAAS / AEM takeover offer, it listed every single asset on its books in its press release so the clueless among YRI's shareholder base would finally know what type and quality of assets the company owns...?
SBB had dedicated a whole web page on this silver royalty complete with past MREs and commentary which is still up today for anyone who took a couple of minutes to search for it (I even provided a link in a past post on this BB). If you were not familiar with both the royalty and its particulars before the offer was made, that's on you.
Take a streaming company like FNV or WPM whose whole business is reaping cash flows from streaming agreements they have with numerous mines (streaming agreements are similar to royalties). If they were ever to be bought out, do you assume they would list every single streaming agreement along with all other assets they currently own upon announcing the deal or during the period between the announcement and the vote?Again, the answer is no ecause they assume that if shareholders are part owners of the company, they should be familiar with these assets already. If not, such information can be found on the company's website or its SEDAR filiings for those who are clueless about all the company owns or controls if only they care to look. If you are not interested in educating yourself not only on the assets themselves, but also their reasonable current value and/or probability of success, perhaps you should reconsider investing in individual stocks and either switch to ETFs / mutual funds or, perhaps better yet, seek the adice of a qualified financial advisor.
In other words, companies make the bold assumption that its shareholders have actually done their due diligence before investing in the company, especially in the age of the Interenet where such information is available literally at one's fingertips.
The Glencore Hackett River royalty is one such example. There is absolutely no requirement that SSB highlight it in the takeover offer as companies assume that its owners should already know about these types of assets. If not, it's negligence on the part of the shareholder.
Further, I never said this silver royalty was irrelevant. I alluded to my belief that the present value of this royalty is minimal given Glencore's apparent indifference to sink more money to even studying its feasibility any further combined with the underwhelming results that were produced during the first two MRE studies conducted in 2012 and 2013. It makes no difference how many ounces of silver is contained in the royalty agreement. If no ounces are ultimately produced, no money is sent to the holder of the royalty, ever. Also consider the time value of money in addition to the aforementioned points (if you are unfamiliar with this concept, look it up).
Thus you can speculate all you want about how high you think (or hope) the price of silver rises, but even if it does, building a mine and mill typically takes 3-5 years from start to finish as a company usually wants to do a thorough feasibility study first to see how profitable such a mine would potentially be at various silver price points after taking into account any streaming agreements or royalty claims on production since the price of silver isn't going to stay fixed for 4-5 years waiting for a company to get to the point of pouring and selling this metal. Add to that the need to apply for and get all required permitting from both the Feds and the Province/Territory (including evironmental assessments), obtain equity and debt financing on reasonable terms to fund the project, enter into agreements with the various contractors and suppliers that will make the mine a reality, complete early works programs (especially in remote areas like those found in Nunavut), and finally engage in the actual mine and mill build, so you can bet that Glencore would need a very enticing silver price environment that it believes will be resilient if they are going to spend years of time and 100s of millions of dollars builing a mine. Finally, for the vast majority of the past 20 years (2002 - 2022), the price of silver has traded in the 5.00 - 20.00 USD per ounce range. Since 1975, the price of silver has only gone over 30.00 during two very brief periods (Early 1980 and for most of a two-year period from February 2011 to February 2013), only to come crashing down to 6.00 and 15.00 respectively thereafter before resuming their normal trading range. That's why many prospective precious metals projects end up becoming moose pasture as the risk is high when a company has to wait years after a decision to build a mine and mill is made, hoping the price of the precious metal either stays high or shoots up like a rocket and maintains those heights so the mine is enticingly profitable enough when it finally starts pouring and selling the metal to have made all the time and effort to get to that point worthwhile.
Given the above, what sane company is going to value the Hackett River royalty at any more than a token amount if any given what we know of it to date?