So i am seriously ....considering taking a small position in this stock monday AM. I have some questions for the longs though.
From what i see and read on the companies webpage...these guys are broke. This is why they are laying off people because they have had trouble securing additional financing. No one even wants to broker a private placement for more common shares evidently. I would imagine if the stock hadnt gone down to this level and had stayed at around 1.00 they would have been able to secure something. What the did do 8-12 months ago, after reading again is 2 debentures of 60 million. For ever 1000.00 bucks of principle debenture paying at 9% per year the debenture holder is able to convert these debentures to 537.63 common shares working out to a common share price of 1.86 which is fantastic and was probably worth it at the time. The thing is unless these shares surpass that level the debentures wont be converted and the 9% will keep getting eaten. Also the debentures holders will get paid first if any buyout occurs. so the first 120 million off the top goes to those guys. that leaves 173 millions common shares remaining to get paid. So if a buyout occured at 1.00 a share that would means 53 million left minus any other priority debts and then common share holder money. I have no idea what debts those might be but lets just say 13 million in debts which would leave 40 million remaining at a 1.00 buyout. 40 million divided by 173 million outstanding common shares equals .23121 per share. So they need that one dollar buyout amount. The one dollar may be to low for all of there properties and equipment etc or it may be to high. Im not certain. I did read in the Nov. 30 07 release that they mentioned dissasembling some of their equipment for sale which they are going to be doing to keep this afloat which is bad. Right now there are focusing on processing the ore which is ready to be leached IE there current inventory which they said would take 1-3 years. The thing is they are not going to be accumulating anymore during that period and if things were progressing perfectly and the were running at optimum efficiency it wouldnt take a year to process the ore. As they mention they cant do all the things they want because they have no money to do them and no where to get any. So they are left with stalling and the white knight theory. A buyout or JV or anything...maybe a meteorite of precious metals will land next to the crusher.
The thing is, inspite of all this, the reason i am thinking about buying is because technically the white knight is SHAREHOLDERS. If they could manage to get the price back up to a normal assessment level, management would begin to have options again and get the ball rolling. Look how close this company is. They are on it they are ready. People are paying over a dollar a share for other companies who only have drill results. THIS IS A TURN KEY OPERATION that only needs financing to fix things and become profitable
What anyone looking to buyout the company should focus on is management is not great and has made mistakes....they may be dedicated, but they made bone head errors and had poor judgement in some of the things they did. Hopefully they learned from them.
The last thing is that it really seems like...as another long time poster mentioned on here that this company was a victim of large share holder manipulation to drive down the price for a cheap buyout. It was dangerously close to working. Im sure if people buy this and give management a chance to act with decent share value they can turn things around and worst case get a decent buyout or much improved shareholder value.
So my questions for longs are
1) is this about right?
2) what do you see the asset value of the company being minus current debts?