A BRAND NEW COTHE CALLINAN STAGE IS SET
The stage is set, players are in place, the plot thickens, the action has begun . There is sufficient mystery to rivet one’s attention until the final curtain,
1.The company has announced a corporate split into (a) a royalty company and (b) an exploration company; NEWCO.
2.A new, young, bright president has been hired who has considerable talent as well as“skin” in the game.
3.The company has announced a share ‘buy- back’ program of 2.4 million shares in recognition of the company being undervalued by the market.
4. The impact on CAA share price is a mystery. Royalty company shares should trade between 10 and 15 x revenue. Callinan’s $ .50 per share revenue should increase consistent with the increase in commodity prices as well as with the positive changes in HudBay’s calculation procedures. The buyback program will also reduce the number of issued and outstanding shares.
5. Callinan, with its increasing revenue, cash in the bank and no debt should meet the listing requirements of the TSE. A listing would qualify its shares to be purchased by the vast majority of institutions that are prohibited, by charter, from investing in a TSX venture company. Will it apply or won’t it? That is the question. Should it? Of course.
6. I believe that the shareholders of both HudBay and Callinan would like to see the two companies ‘make peace, not war’ over the War Baby. After years of hostility, a possible marriage of Callinan and HudBay is intriguing.
7. Of course, the audience is aware of the possible dues ex machina , that hovers over the world stage, which can positively or negatively affect the best laid plans of mice and men in any jurisdiction.
When the final curtain falls, I predict that there will be happy shareholders on both sides of the aisle.
Symbol: CAA ( TSX venture
Website: www.callinan.com
Closing price: Apr. 28, 2011 : $ 3.00KRR2J