The Management of Orko are: 1) Geniuses
2) Fools
or
3) have simply fed on the shareholders with their cheap options and superb compensation and are tiring of Orko and want to move on to focus their efforts on Orex.
Or 4) a combination of 1 &3 or combination of 2 & 3 above.
The next month and the appearance or non-appearance of another higher offer will determine which it is for me. Frankly, I don't get it . Even the watered down Pan American PEA valued Orko at $2.25 share @ $25 Silver. We now sit 14 cents above that with $32 silver.
If you believe management, the work they and AMEC have done since the Pan American PEA has increased the value of the property substantially. In spite of this, they 1) enter into an agreement to "accept" $2.72 tied to the First Majestic stock price knowing full well (Gary is a former broker so I would think he would know full well) that First Majestic is going to dilute their stock by 12-13% to pay for it and their stock price will take a hit (as almost all acquiring company's stock prices do post takeover announcement). So now the FM stock price has taken a hit and what we have is an offer of $2.44 (the arbs can play their games for the next month and make their nickel a share).
On top of that, Orko management forfeits the right to their own PEA, paid for by shareholders, which presumably would enhance the value of the company further, less than 60-90 days down the road. Seriously, what kind of negotiating is this?
At this stage, should another offer not materialize, there is not even a guarantee of realizing $2.72, as others have pointed out. I hope that the price of silver will rally in the next 45 days and or the price of First Majestic will bounce back a bit.
Now I am long 55K shares and basically at break even but I can tell you that if another higher offer does not come in I will never consider investing a nickel in another company that Gary Cope or Mike Devji are involved in. Yes, the market is very tough for the juniors right now and I hope they prove me wrong by creating a bidding war. Unlike many on this board I've never felt my expectations to be really outrageous on this stock, particularly in the past year with the beating that the juniors have taken. But it's hard for me to believe that $3.25-$3.50 would not be reasonable even now. We may never get to know if that is indeed true with no PEA.
I hope that what unfolds over the next 45-60 days will help me appreciate Mr. Cope and Mr. Devji a bit more than I am right now. I'll be holding, that's for sure.