GREY:CCNMF - Post by User
Comment by
birchjunkon Jun 13, 2011 11:30am
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Post# 18707095
CAA price should rise, post spin-out
CAA price should rise, post spin-outCAA will be a pure royalty play and no longer responsible for about $8 million in exploration costs that it now funds.
That $8 million is pure and free cash flow that can then be used to fund new royalty assets.
Pure play royalty companies trade above 10 times annual cash flows.
The extra $8 million in free cash flow net to CAA, released by the spinout, will add another $80 million to the market cap , or about $1.60 per share.
This is why CAA's share price will move upwards after the spin-out.
Of course, some fools will not bother to do their valuations and will sell ,once they get their Callinex shares.