you know The smart thing to do right now might be for them to consider selling the silver royalty. I would expect some would say, are you crazy, what they can get for that is going to be way less than what they could have a couple years ago.
I wonder if it could sell for $200 million right now. (which would be roughly $4 per ounce of silver).
The point is: While I'm sure the value of royalties has gone down, I doubt it has gone down anywhere close to as much as junior exploration/development company stocks like Sabina's has.
So what if Sabina were able to sell the royalty for $200 mil. They would then have $300 mil of cash. They could keep developing Back River full speed ahead but would have a good solid 3-4 years worth of money in the bank rather than 1-2 years worth. Shareholders would not need to worry about there being any risk of dilution any time soon.
Another way to put it that might be more compelling: When Sabina stock was $5 per share or so that royalty was worth $300 million, perhaps as much as $400 million.
If Sabina sold the royalty today at $200 mil, then you would be thus losing out perhaps on $1 per share in the value of the royalty if it becomes worth $400 million once precious metals prices have recovered. (fully diluted shares are about 200 million).
So you would be getting "anti-dilution insurance" for $1 per share.
Now, if and when precious metals stocks recover Sabina ought to easily be able to fetch $100 per ounce of gold in the ground if not more. With 6 million ounces that's $3 per share. With the cash they will have on hand that will be another $1 per share or so.
Thus, we are looking at a few years down the road a stock price that may be $5 if they keep the royalty or $4 if they sell the royalty, but the $4 per share will have DILUTION INSURANCE. So we will have a lot better odds of actually raching that $4 per share for the "Back River Only" Sabina than the $5 for the "Back River Plus Hackett Royalty" Sabina.
I would be interested in opinions on this. I am of course assuming the royalty could fetch $200 mil in today's market which is speculation. However, frankly, if Sabina wanted to spin out the royalty as a separate stock I would be eager to buy it if the valuation that were set on it was $200 mil.
In fact, it just occurred to me, I would probably be more eager to buy Sabina stock right now at the current price if the ONLY asset they had was the royalty and not the Back River project.