GREY:ARHTQ - Post by User
Comment by
eventtraderon Mar 09, 2010 10:06am
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Post# 16860114
RE: RE: RE: RE: asks
RE: RE: RE: RE: asks"i it is trading more than 4 times the price it will end up if the drill is disappointing. ".
Ok, so you are saying that if QD-1 or whatever they call it comes up dry, then VST will trade back to 19 cents? So you figure that the exploration value would be worth 60% less than it was before a hole was drilled? Because in the notes to their 2Q09 statements, NKO said they paid $30m for an additional 10% stake in QD. At the same time, VST issued 60m shares to the KRG, also for an additional 10% stake. Seems like an arms length transaction valued VST at 0.50/share. So again, you think any negative news from the drilling will result in the price falling to 19 cents, 60% below the only real valued implied by a real transaction on the same block? I'll use as my worst case scenario the valuation implied by NKO's transparent, well informed decision.
Once you strip away your assumption about dilution after a dry hole, all you have to support your view is the $4 valuation from IHS -- great source -- but its just an average that presumably lumps in properties with many different characteristics. Maybe its only worth $1, maybe it's worth $10. You think a property valuer in Vancouver is going to use a nationwide price/sqft number an apply it every house they have on the market in Vancouver? Talk about ridiculous valuations!