RE: RE: RE: RE: RE: RE: RE: Whats with HRG?In my opinion, another slime move by Severstal / HRG ``management``, such as using HRG`s cash to buyback (and retire) HRG minority shares, will only end up being yet another dead end move. Yes, they might be able to increase Severstal`s percent ownership slightly, but they will not be able increase their owership from low 70`s to 90% (to reach their greedy goal of stealing the company by closing out us minorities, IMO).
The funds will not sell until they see fair value. The more Severstal / HRG ``management skrews us around then the more the funds will dig into their position, and the more determined us little retails shareholders will become.
Notes:
* High River`s share price was $3.50 in early 2008, while the gold price was generally around US$800 - US$1,000 back then. The gold price is around 40 - 50% higher today, compared to when HRG traded for $3.50 per share.
* HRG is in far better shape today. HRG had around C$200 million in debt when it traded at $3.50. Also, almost all key assets were pledged as collateral back then. Today, HRG is virtually debt free and with virtually no pledged security (after they solve the minor count case issue holding up the strategic investments from coming free).
* HRG was in the process of breaking in 2 new mines back then (complete with typical new mine uncertainties) - $3.50 share price. Today, Taparko is now operating efficiently and significantly ramped up (which occurred after the 2nd mill was installed). Berezitovy is about to reach that state also, with the second mill now in place (end of 3rd quarter). HRG is in far better shape operationally today relative to early 2008.
* HRG was in development phase back then ($3.50 share price), with net losses on the Income Statement, limited revenue, much lower gold price, high cash cost per oz, and a lot less cash in the back. HRG now has 4 mines in production, excellent net profits and cash flow, almost no debt, and C$200 - C$250M in cash, cash eq. and investments. Operationally, HRG is in far better shape today than when the share price was $3.50.
* Bissa was still only at exploration stage back at $3.50. Today, Bissa is soon to reach mine development stage, and could be in production in about 1.5 years - 2012.
For me, the very bottom of fair value is $3.50 (and that`s with a discount). The top of fair value is unlimited. Sure, the outstanding share count has doubled since early 2008, but if we had the old share count today, and Severstal / HRG ``management`` were not playing suppression games (IMO), our share price would be $10 per share today (at the old share count) - $3.50 to $5.00 at the current ballooned share count (this would still represent a tiny market cap relative to higher level mid-tier companies like Eldorado Gold, Randgold, etc.).
Also, I think Severstal / HRG ``management`` will likely need TSX`s approval to initiate a buyback. In addition, even if they did initiate such an initiative and even if they got the approval, 5% (or even 10%) buyback will not get them from low 70`s to 90%. They will again fail to close out the minority shareholders. If they want to do the 5% buyback to increase their Severstal`s % ownership for the IPO then they might do more IPO damage than good - playing games with the minority shareholders again. It is one thing to increase their percent by exercising existing warrants, but it is another thing to continue squeezing minorities to get a higher percentage of the pie (especially after never promoting the company since they started 2 years ago). The people signing up for this new IPO will become Severstal minorities also. I`m sure they will wonder how they will be treated in the future, as minorities.
Clearly, in my opinion, Severstal / HRG ``management`` have done nothing to promote HRG. I have seen no signs of them making an effort to drive up the share price either through positive promotion via news releases or promotion via the media (BNN, etc.) or promoting the company by attending any of the many investor comferences that occur every month (which hundreds of other mineral resource companies attend). In my opinion, they better start promoting High River if they want to move it forward. The games will never get them the 90%. They might as well seek to maximize return on investment for all stakholders.
Anyway, below is part of an NR from a TSX Venture company called Midland Minerals. They had to apply to repurchase their stock, in accordance with TSX Venture Exchange rules and policies - Policy 5.6, Normal Course Issuer Bid. I`m sure the TSX would have something similar in place also, for ``main board`` companies. If Severstal / HRG ``management`` were to apply, I would hope they would be denied due to recent history of takeover attempts and the numerous subsequent events that took place to increase the Severstal share percentage to low 70`s.
``TORONTO, ONTARIO, Jun 15, 2010 (Marketwire via COMTEX) --
Midlands Minerals Corporation ("Midlands" or the "Company") (TSX VENTURE: MEX | PowerRating) is pleased to announce the Company has applied to the TSX Venture Exchange seeking approval to repurchase its stock on the open market in accordance with TSX Venture Exchange rules and policies. Management views the Company's shares to be significantly undervalued.
The repurchasing of Company stock will commence Friday, June 18, 2010, and conclude at the latest date of June 17, 2011. The buyback will occur in accordance with TSX Venture Exchange Policy 5.6, Normal Course Issuer Bid. There currently 104,249,791 shares issued and outstanding, and the total public float is 80,272,339. The percentage of
securities that may be repurchased by the Company, subject to regulatory approval, will not exceed 5,212,489, or 5% of the issued and outstanding shares of the Company. The Company will work with D & D Securities Company as
broker on this NCIB.``