High River Gold Mines Ltd HRIVF

thoughts on a takeover,valuation

[shortUSA2]

I agree that the only likely suitor for HRG would be a mid tier to small senior.   Assuming the Russian assets are not separated out I can think of only one likely company to take a run at HRG.   That would be Kinross.  I know of no other companies of the appropriate size that are already in Russia and I would think it unlikely that a company with no Russian operations would be eager to plunge into this dubious jurisdiction.   One possibility is that HRG are working on a plan to have the African assets and Russian assets taken over simultaneously by two separate entities.   There are probably a lot of companies interested in Burkina Faso but decline to take a run at it because the Russian assets are attached.    When they first announced the strategic review, my expectation was that they would form two companies.   One Russian and one African.   This would have afforded a much higher valuation for both and we would also have seen a nice takeover premium attached to the African assets because they would have been in a nice neat package ready for takeover.
    As for HRG's current valuation,  I don't think the market is giving them credit for 300,000 ounce production.   Just look at the market cap and compare it to ELD.   They have similar production with similar growth potential.   One difference being that ELD's costs are much lower.   Still, once HRG  shows the market that they have achieved the 300,000 rate and start generating real profits there is no reason they can't have a valuation that is at least two thirds that of ELD.   Note if you go checking ELD's market cap, keep in mind that it is about 20% below where it would normally be because of their temporary mine closure in Turkey.