RE: Some thoughtsA good , thoughtful post C&S. I too have been to a few AGM's and itis a hostile environment for the average local shareholder off thestreet. There is strong solidarity ( in part based onfear of Ken ) behind the CEO, management and the BoD. I don't believethat the BoD is able to act independently of the CEO , that is howtight his control is.
In the past it has become known that the vote is far from unanimous in favour of the remuneration of the CEO and other items on the proxies. Ithink one year it was shown to be over 30% against the propositions.Since there are 225 million shares out there it sure seems hard to feel like you're being heard with the small amount of shares most of us hold. I think that a sign of shareholder solidarity would be to have a group of X guys/gals stand up in support of one spokesperson at the microphone . And emailed questions could be read out for people who can't make it. They will not tolerate an extended period of time for 1 party to monopolize the mic so a person would have to cut to the chase.
If you look at the analysts price targets from TD and RBC it is painful to see that the share price is where it should be for many reasons . Justifiably, they will not acknowledge or speculate on the entry of a major partner for a junior play like this . While I think of analyst's forecasts for a junior miner to be worse than any weekend forecast from a meteorologist , they do point out the Key Risks on this project . I suppose one might simply say that they use the same statement for all mining projects without due consideration. See the TD report from Jan. below. The NAV of 15% is extremely conservative , I believe . Companies with projects in varying stages of thefeasibility study process will generally trade anywhere from 20 - 75% oftheir NAV. Note, the major analysts are going to re-assess this following release of the DFS ( Definitive Feasibility Study ) in Q2 . My feeling is that another delay to the release of that DFS would kill the shareprice :
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Shore expects to release a Definitive Feasibility Study (DFS) for the Star-
Orion South project in Q2/11 which is expected to provide the basis for a
production decision in the near future. We believe the study has the potential
to improve upon the results of the February 2010 Pre-Feasibility Study,
particularlyin light of the project’s significant leverage to changes in roughdiamond prices, which have risen materially over the last 12 months.
We make no changes to our valuation at this time, but expect to revisit our
assumptions with the release of the study. We maintain our 12-month target
price of $1.00/share and reiterate our HOLD recommendation.
Outlook
Withan estimated cash balance of approximately $20 million, Shore appearssufficiently funded to complete its planned feasibility work. Weunderstand the company remains engaged in desktop engineering, dataanalysis and other activities to advance the project. We expect thecompany to complete the Star-Orion South DFS in Q2/11 followed by aproduction decision shortly thereafter.
Valuation
Wehave set a 12-month target price of $1.00/share, based on our fullyfinanced corporate NAV15% of $1.56/share. We credit Shore with a 60%interest in the Star-Orion South project assuming that Shore will needto secure a 40% partner in order to fund project construction.
Justification of Target Price
Our12-month target price is based on 0.70x our fully financed corporateNAV15%. We applied a discounted multiple and a high discount rate in aneffort to reflect the project’s relatively early stage of developmentand
the high degree of forecast and financial risk that attends to our valuation.
Key Risks to Target Price
Themain risks facing the company include forecast, financial, technicaland political risks. Among other things, these include risks related torough diamond price risk, the governing fiscal and legislative regimes,the
timing of key developments, market conditions, capital andoperating costs, foreign exchange rates, resources and reserves,operating parameters, permitting, environmental, indigenous peoples, andstaffing and key
personnel retention.
Investment Conclusion
We maintain our 12-month target price of $1.00/share and reiterate our HOLD recommendation.