Join today and have your say! It’s FREE!

Become a member today, It's free!

We will not release or resell your information to third parties without your permission.
Please Try Again
{{ error }}
By providing my email, I consent to receiving investment related electronic messages from Stockhouse.

or

Sign In

Please Try Again
{{ error }}
Password Hint : {{passwordHint}}
Forgot Password?

or

Please Try Again {{ error }}

Send my password

SUCCESS
An email was sent with password retrieval instructions. Please go to the link in the email message to retrieve your password.

Become a member today, It's free!

We will not release or resell your information to third parties without your permission.
Quote  |  Bullboard  |  News  |  Opinion  |  Profile  |  Peers  |  Filings  |  Financials  |  Options  |  Price History  |  Ratios  |  Ownership  |  Insiders  |  Valuation

High River Gold Mines Ltd HRIVF



GREY:HRIVF - Post by User

Bullboard Posts
Comment by Olderwisernowon Aug 07, 2008 1:43am
184 Views
Post# 15364492

RE: Bought some more at 1.25

RE: Bought some more at 1.25Lots of emotion. But lets apply a small amount of logic.
Many do not like the $1.79 investment price. What price would be fair?
HRG has had a poor performance of late. What amount, given market conditions of this sector would one have expected to occur. IE Kinross, Goldcorp and almost all others are off from their highs. So would anyone have expected HRG to be at its high now?
If you think HRG, for example, would have come off 33% from its high range it would now be trading at around $2.35 range. Certainly it would have dropped with the sector to some degree, all things being equal. Both Kinross and Goldcorp are currently off about 33% from their highs. It could be reasonably argued that HRG has more risk, so the drop would have been expected to be at least this 33%. Yes or no??? 
Often when you do private placements, they are at a discount to price. So what price would they have been able to do a placement at if the stock had been in line with this. At $2.35 or at some lower price? 
 The other factor, of course, is whether the deal they struck with Prognoz is a good one. Would they, or should they have had to pay more, and is there any relationship between all of this pricing?  What is the value of Prognoz additional 50% in other words. Is it  more or less than what has been paid?
The number one fact now, baring all of the conjecture is this. Is the stock cheap here or not?
If you think the investors are paying too little, $1.79, when the stock trades for $1.26, then why would the stock be expensive to any other investor at this point. I mean think about it. If folks think that the price of a private placement should have been higher, say $2.25, does doing it at $1.79 mean the stock should be valued at $1.26?? That is the fact right now. It may be dilutive, but it is very hard when you do the math to arrive at this big a discount, and that in itself should be enough for some to buy at $1.26
So is it a bargain?
Some simple math here to consider:
50% of Prognoz is costing 34,100,000 shares and $16 million in assumed past expenditures.
The seller is getting under $50 million at current rates. At $3.50 would he have taken less or more? Probably a lot more, but say it was for the same number of shares at that time. Around $120 million. 
What is Prognoz worth to HRG and the sharholders when this deal is done and the stock out is just over 500 million shares, and what is the value of it all?
If the 50% is only 100 million ounces then we paid around .50 per ounce. Does anyone think there is more there? I would say EVERYONE does, as per the last resource estimate. So is there  400 million ounces or is it , 600 million or even possibly 1 billion ounces? Is the 50% worth only .50 per ounce? I say very reasonable is probably at least 400 million ounces, so we probably got 200 million ounces from this deal. but with huge potential upside, and not much downside.
 Now what do you value 400 million ounces of in the ground silver at???
What do you value the current other assets at? Lets say ZERO for example.
On a very simple basis, how about this. At  400 million ounces and around 500 million shares out when all is done on these two deals, you would own for each share about .75 ounces of silver.
Now ask, what value is this? Does it represent  .75 times say $5 per ounce after getting it out of the ground and covering ALL expenses? That leaves by the way $11+ to do that per ounce.
And what is that .75* $5  equal to? $3.75   Getting the picture yet.
Now add on the cash and the other assets, or say they are worth nothing.  Consider carefully, that nothing starts with the $286 million in cash coming in. It includes everything else, minus the liabilities.
I am trying to show you why, as a speculation I think VALUE ASSERTS here over time.
So consider all of this, and play with the figures all day if you like. Consider what happens if Silver goes to $30 plus per ounce for example, as I expect it will do over the next few years.
I like buying assets on the cheap. That is what I see here. Do I think managment might have done a bit better in a number of areas? Absolutely for sure. They should smarten up, get their value proposition out etc etc etc
BUT at $1.26 this is an absolute steal, and some are doing just that right now. Selling to trade, well who knows what happens short term. Investing to make money over the next while. This is as near a slam dunk as you will get in this sector.IMO IT REALLY IS THAT SIMPLE. The risks, there are some, this is mining. But even these guys may have trouble having value not express over time.IMO
Bullboard Posts