Still confusing for warrants holders
Franco-Nevada (TSX: FNV; Pink Sheets: FNNVF)
Gold Wheaton and Franco-Nevada Amend Terms of the Consideration and Sign Definitive Agreement for Friendly Business Combination – January 6, 2011
This is good news for Gold Wheaton shareholders, see below:
Gold Wheaton warrant holders will now have more flexibility in the form of consideration, in that, at the time of exercise, they will have the option to elect to receive either (i) 0.1556 of a Franco-Nevada common share or (ii) C$5.20 cash.
Whereas previously exercising the warrant would entitle you to a partial cash + share payment, now you can elect payment fully in shares which is what a warrant holder would want since the cash is fixed and takes away a considerable amount of leverage. Nevertheless, having done the math we find it highly unlikely that Franco-Nevada will be able to double or better in the next 2 years even if metal prices move significantly higher. The good news is that we are in the midst of preparing a Top Warrant report and we believe we’ve identified much more compelling opportunities. This report will soon be made available to subscribers of Metal Augmentor. [Zurbo]