High River Gold Mines Ltd HRIVF

RE: RE: RE: Analysis – minorities holding tightly

[ccharlwood]

Hi Bart,

From what I understand, the rules are that a company can issue shares up to 25% of outstanding shares at up to a 25% discount to market price - all without shareholder approval. Therefore, under this maximum scenario, Severstal would buy 162M shares (649M total now)  at $.285 for a total $46M. This 162M would get added to the 400M shares they own, plus the 40M in warrants (if exercised). Final ownership would be 602M shares out of 851 or 71% - 10% more than they own now. I believe that any conversion of their debt would be grouped in with these maximum allowable percentages and not added on top. The difference between 71% and 61% is not going to change how they are able to run the company. Also, if their plan was to make a buy out offer again, they still need majority of the minority and I believe they must wait 6 months from last offer.

The good news of such a scenario is that there is $46M less debt. At the end of June the company had $135M debt. Q3 ends today and let's hope another $30M has been paid down. If so, then after such a transaction stated above, HRG has only $60M debt left. This means debt free at end of Q1 next year if each quarter produces $30M cash flow.

As stated in my previous post, this makes debt totally mangeable going forward and provides enough cash to fix mills. It also may signify that Severstal is going to begin to extract maxium value for their own shareholdings  - which benefits us all.

If  anyone thinks I am wrong about the rules or my math above, please correct me. Also, this info is based on my limited knowledge and does not come from my lawyer, therfore, you need to do your own due diligence..