GREY:PGDIF - Post by User
Post by
Durkastanon Dec 02, 2010 8:55am
404 Views
Post# 17788314
Today's action
Today's actionI agree with previous posters that BHP's decision not to obtain another 7% of the project is a net positive for PGD... over the long run.
However, in the short run (meaning the next few years) this now means that we're going to have to come up with substantially more cash than we would have otherwise. This will certainly instill negativity in investors with a shorter time horizon, even though the present value of our additional ownership almost certainly trumps the extra cash we need in the shorter term.
On the other hand, we've got more than enough in the bank to manage the entire 2011 drill season, so those with a shorter time horizon have nothing to worry about for now.
The decision *theoretically* should not materially affect our share price - nothing has changed at all, and it is business as usual. Go back 6 months - did the thought of BHP's option to take another 7% of the project affect your assessment of PGD's value? I know that it barely crossed my mind - the discovery of new kimberlites was the pretty much the sole driver of value in my mine. And our share price almost certainly hasn't risen on the expectation of BHP opting in. We will nonetheless probably open lower this morning based on perceptions and event-driven traders.
"All eyes on CH-6", as someone mentioned, pretty much sums it up. Whatever happens with the share price today or over the short term in the absence of news will all be forgotten when those results get released. I would use weakness to add to my position if I didn't already have all the PGD I can handle.