Post by
netgenx on Jan 21, 2014 12:55pm
where to for Virgina
So now that Goldcorp is approaching start up of Eleonore later this year, it's time to consider what might lay ahead for Virginia. I have long believed that the royalty on Eleonore is worth $12 at current gold prices. If you believe as I do that gold prices are bottoming , the royalty payments from GG can only go up from here, even if you ignore the probable doubling of the resource that will come with further exploration. I suspect that GG must be considering a VGQ buyout to protect themselves against a large move in gold price on an expanded resource, and given their recent move to acquire Osisko they are seeing a bottom here as well. I can easily see an offer of $20 from them For me the question then becomes; if they make a move on VGQ, won't that provoke one or more royalty streaming companies such as Franco-Nevada to take a run as well? Given the metrics currently in use for these "streamers", $24/share is not a stretch given the potential resource expansion. What will Andre do? It seems he might also be trying to transform VGQ into a royalty company to protect against such an outcome, or he could sell the Eleonore royalty and spin off the rest of Virginia yet again. I talked with ALS (they own 8%) yesterday at the Vancouver Gold Show and my impression was that VGQ teamed up with them partly to make a hostile T/O more difficult. The guys at ALS are young, sharp, & aggressive and won't let VGQ go cheaply. It should be an interesting year!