RE:Seeking Alpha's Value Digger Covers PTAA good post but I think it fails to consider the current capital structure as a key driving force to keeping the share price down. The anlaysis is completed on a basic number of shares o/s. In May 2014, 79M warrants expire. These have a $0.35 exercise price. If these 79M additional shares were outstanding today, that would result in dilution to the current common shareholders by about 15%. Unless there is a substantial increase in reserves, I think the market will hold the value of the common shares under $0.35.
It appears that at least 33M warrants are priced at $0.20 will get exercised but there is still 1.5yrs left before they expire. There’s also 39M stock options priced between $0.10 and $0.25 that appear to be safely in the money and will also be exercised (although they remaining life on these options is almost 8 years). These in the money instruments represent a dilution of about 12% of the current o/s common shares. When you’re looking at net asset value or EPS, my view is that these are really as good as o/s instruments right now and should be factored into any calculation.
If the common shares trade at anything greater than $0.35, the common shareholders will be diluted by about 27% based if the instruments above are exercised. This would happen over a period of time but this is a substantial dilution that the market has clearly priced in to the current share price.
I don’t need to look at the 180M warrants priced at $0.75 as it would appear highly unlikely that these will be in the money a year from now when they expire. This would represent an additional dilution of 31% if they were fully exercised. It would be great if PTA was able to increase reserves to justify a share price that high but I think the probability of that over the next year is low.
PTA is a good company with good properties and good management. They will continue to grow cash flow and reserves over time but most on this board seem to expect elephant discoveries with every test drill. IMO, longs should be happy to accumulate at these prices as they will be rewarded for their patience.