Post by
bendystock on May 30, 2016 1:51am
I Vote No and here is why
I read through the information posted on Sedar and plan on voting no. Pretty simple really, I see no reason to sell an asset for less than 50% of what it is worth when there is now, no pressing reason to sell.
The Cukaru Peki Project has a NPV of between $679 Million and $1.632 Billion and Nevsun is offering $365 Million. (in USD)
Would be happy if Reservoir Minerals sold to Nevsun or another company for $567 Million USD putting about $12 per share CDN into my pocket. Otherwise let's keep moving towards building a mine of our own and finding out how much the porphyry is going to be worth.
I found the Background of the Arrangement (page 43-48) fascinating. I think RMC did an outstanding job of both fielding offers and finalizing a deal just in time to exercise the ROFO. At that time Reservoir needed money quickly, there was a deadline and selling shares at $9.40 and accepting a loan was in my opinion great.
Now Reservoir owns the whole Cukaru Peki asset, from the Background of the Arrangement it sounds like they would have no problem getting financing at a reasonable rate or with minimal dilution to pay back the loan and the termination fee.
I see no need to rush now, I hope that institutional shareholders agree with me and vote no or put up enough of a threat in the background to force Nevsun's hand into paying the equivalent of $12 per share.
Wishful thinking? Most likely but stranger things have happened, like drilling a hole through 10% copper.
From E-88, about page 236
Three mining phases of mining were modelled, in summary:
• The DSO Starter Mine in isolation has a post-tax NPV of USD 679 M with an IRR of 103%.
• The PEA Base Case which has additional concentrate production from the Main UZ Mine (>2.5% copper), the post-tax NPV increases to USD1,552M, and the IRR is 106%.
• The Extended Case where additional concentrate production from the Main UZ Mine (>1.0% copper), the post-tax NPV increases to USD1,632M, and the IRR is 106%.