RE: Valuation of Warrants The time value of the Pretium warrants is about 10 cents. For example, as of now, January 17 at 1:20pm EST, the PVG stock is bid $15.58 and the warrants are bid $3.18. The current bid for PVG stock ($15.58) minus the exercise price ($12.50) of the warrants leaves $3.08 intrinsic value, and leaves you 10 cents remaining (time value). If you use the last *sales* of stock and of warrants, the time value is 14 cents. Therefore, depending on how you calculate it, the time value of the warrants is between 10 and 14 cents at this time. The time value will of course head towards zero, but it is now already so low that prior to expiration the warrants should trade almost penny for penny up or down with the value of PVG stock. In other words, if PVG goes up $3.00, the warrants will go up nearly $3.00 also. And therein lies the incredible leverage of these warrants. A $3.00 increase in the value of PVG is a 19 % increase for PVG but a 94% increase for the warrants. (Of course, the leverage works both ways and if PVG drops the % drop in the warrants will be much more than that of the stock.)
Are the warrants still a good bet? For me, I am expecting three things to lift PVG and the warrants higher:
1) A preliminary economic assessment (PEA) currently expected before the April, 2012 expiration of the warrants;
2) increased demand for the stock due to its new New York listing;
and 3) a higher gold price over the next few months.
It is up to everyone who owns or wants to own the warrants to decide on the likelihood and stock price impact of these three factors (and other factors not listed).
TC