Nord Gold IPO? - HRG 57% of productionJust sent this message out to HRG shareholder database.
Sorry for repeat - some of the articles already posted here on SH.
January 16th, 2011
Symbol: HRG.TO
High River Gold Minority Shareholders,
It looks like things are heating up again for a possible Severstal/Nord Gold IPO on the LSE. I have posted links below to 4 recent articles. They state that pre - IPO marketing starts next week and that ex-Anglo American exec, Phillip Baum, is to become Chairman of Nord Gold. The articles mention Nord Gold's value at up to $3.2B pounds or US$5B. HRG made up approx. 57% of Nord Gold's total production in 9 months to September 30, 2010 (233k oz vs. 408k oz). Shareholders await drill results and the Prognoz bankruptcy decision to bottom out HRG's resource numbers, but on a production only basis, HRG's pro-rata value would be $2.85B or $3.39/share.
Q4 and year end results will probably be out on March 31 and the expectation is that HRG is back up to its Q2 production level of 87k oz. The average gold price in Q2 was $1195/oz whereas in Q4 it was $1389/oz - an increase of $194/oz. In Q2 HRG had $48.8M in cash flow. Assuming costs have remained the same, the extra $16.8M in revenues would bring HRG's cash flow to $65.6M. If so, then the current market cap of $1.02B has HRG trading at a low 3.9 times cash flow. At the end of Q3, HRG had $125.6M in cash and equivalents. HRG's third party stock holdings are currently worth $101M. Therefore, at the end of Q4, HRG should have $226M (cash, equivalents, third party stock) plus Q4 cash flow less exploration expenses. Perhaps we will see a net number over $250M or $.30/share.
As we wait for the Q4 results, we are hoping for announcements stating that our $101M of third party stock investments have been freed up for liquidation and that the Prognoz Silver bankruptcy has been resolved in HRG's favour. Also, we are expecting updates on exploration and drilling at Bissa, Zun-Holba and Irokinda mines.
Articles
Chris Charlwood
Investor
604-718-2668