Orko Better Placed Than Most Now that the shock of the recent sp drop has passed, on reflection, I honestly believe OK is very well placed to reward shareholders in the not too distant future. Many of us wanted a position whereby multiple vendors would be able to bid for LP, that’s exactly what we’ve got now, the only difference being PAAS is not one of the bidders and we don’t have an opening bid just yet. The share price drop will be quickly forgotten about once a bid arrives, PAAS needed to bad mouth the project to save face and in return Ok got access to all their data. I look upon the price drop as a golden opportunity to add at a give away sp. What investors need to remember is the following:
1. The LP resourse is one of the largest pure silver plays on the market. It is a very, very attractive asset and this is reflected in the fact that 4 majors are scrambling to do DD.
2. Majors have built up significant war chests and M&A activity has taken off with majors looking to take advantage of the low valuations and current silver price. This is a big mine, in a good country, owned by people that want to sell.
3. Whatever way you look at it, the demand for silver is increasing whilst the supply is decreasing. Majors need to keep buying projects like LP to remain in the game.
4. You can bet that the other majors know exactly why PAAS had to hand the project back, they could not afford it after Minefinders and their sharehoders would not stomach more dilution.
Look at PAAS, they ended up paying way over the top for Minefinders because they were desperate for more ounes. They have not sold any of their 4 million shares, does it make any sense for them to hold shares in Orko when they do not believe the mine has a future?? I think we all know PAAS is not in the business of doing Ok any favours, they expect the project to be bought. Other majors are desperate for ounces but unlike PAAS other majors have the cash to take Ok out.
As investors you would not recommend buying gold or silver producers at the moment but there is money to be made in identifying juniors that are ripe for a takeover. Ok is a red hot takeover target. PAAS were bullies that wanted to steal the project from us by doing everything in their power to undersell the project. They wanted the project until a board meeting decided their stock price could not take another hammering.
We have a new resource and PEA coming, it just does not make sense that this project will not be bought, it is just a case of when and for how much. Now that LP is available on the open market I can’t see this company being around come year end. I can see an offer from at least one major as soon as DD is completed. Why wait, why would you wait for the silver price to tick upwards or give competitors more time to do DD. Now is definitely the time to buy.
Keep the faith longs, will add more if it drops into the 1.20’s today