RE: V&O will not sit on the projectKultsi, the ball is definitely in Vale/ODB's court right now not Largos..... They hold all the cards at this point. There is still tremendous upside here from these prices IF Vale/ODB want LGO to move the project forward and to become their 49.9% JV partner.
A buyout is possible but I would doubt that Vale/ODB would buy out largo entirely. I expect it would be a cash deal for LGO's 45.6% interest in Maracas. It would be in Vale/ODB's best interest to do it earlier rather than later. The current market provides an avenue for a lowball offer for Largo's stake, that could see a good deal of shareholder support if its a fair bit higher than the current price. Depends on who takes up the $3MM PP. If Vale does buy out MFNB and has Largo handcuffed with a minority stake, the offer could be a lot lower than most would see fair. I would like to see something in the $50MM range for the 45.6%, that would get a yes vote from me at this point. That would leave LGO with about 25 cents per share cash and Northern Dancer. Could come in a fair bit lower than that though. Ultimately I would like to see Largo move forward with production on this either from an operator position or from a minority partner. That is up to the big guns to decide. Again it all boils down to whether Vale/ODB want to mine this deposit themselves, have someone else do it, or to sell it.
Its in their hands right now not Largos.
A call to management to get from them what their direction is going to be may shed some light. I believe they owe investors some clarification on where they are planning to go with the Maracas project at this point. They did drop the big proverbial ball on our feet.....
There should be a new resource estimate and scoping study out on Northern Dancer in about a month. If the numbers are good which I expect them to be, we may see a bit of a move up from from our current price but until there is some certainty on the direction of Maracas I don't expect the price to move to much higher levels.
There is still value here. They sit on 70% of what could be the biggest undeveloped tungsten deposit in the world. They also still have the 45.6% interest in Maracas although its worth much less than half of what it was with them having potentially 80%..... The value there is unknown until we know what direction Vale/ODB are headed...... A JV of some sort with Vale would send the stock much higher. Silence is our worst enemy right now.
I'm still very surprised that they couldn't make a deal somewhere with someone for $5MM.... Just seems like such a small sum for such a large piece of a very lucrative deposit..... Does it speak of the current credit crisis? Maybe. Does it speak of managements incompetence? Maybe. Doesn't sit right though. With all the connections they have. With their track record. With the people on their BOD. With past relationships etc...... Nobody was willing to lend them $5MM even at a high interest rate with some cheap warrants attached and the property as security?? Seems strange.
I still think something is up here..... Vale knows project financing is unlikely for LGO with the current credit market. What good is the deposit if LGO can't borrow to build a mine..... Nobody's lending for mine finance at this point. But they (Vale/ODB) have the capital to build the mine. Could Vale/ODB put up project financing with juicy terms on their end, still sitting on 49.9% to reap the profits, and have Largo's stake tied to security on the loan? Vales risk is zero as they would gain the project back entirely if LGO somehow fell apart.
Vale did just form a 50:50 JV with Teal (TL.t) through African Rainbow Minerals and the deal was a big premium over the market so there are deals happening......
Sit and wait....
lurk