RE:Every company has an option for consolidation..!!??@Benzo- see pg. 15 of the following re: share consolidation:
https://www.bajamining.com/content/pdfs/other/Info_Circ_FINAL.pdf
@ACES- I'm not saying consolidation is necessarily a good thing, in fact I would probably vote no for it, but it can have distinct advantages in our case. The case of Aurcana you refferred to is a good example of a stock falling after consolidation. But, they consolidated right at the height of the commodity supercycle, and since then they've declined like every other junior resource company. The junior mining sector as a whole is down around 70% since the collapse in 2012, Aurcana's SP is down slightly worse than that- so how much can be attributed to the consolidation, and how much to the decline in investor appetite for junior miners? I don't know, unfortunately we can't really isolate one from the other.
And for every bad example out there, there's a good one- take a look at Coeur Mining who did a 10:1 consolidation in May 2009, their stock went up from there for the first several quarters (and now has declined in line with all other miners in resource sector). See historical data here:
https://ca.finance.yahoo.com/q/hp?s=CDE&a=04&b=12&c=2009&d=07&e=25&f=2011&g=d
Or Catalyst Copper who just did a 3:1 consolidation in June of this year (3 shares @ around 4 cents per, combined to make 1 share @ 12 cents), and now that 12 cent share is around 30 cents:
https://finance.yahoo.com/q/hp?s=CCY.V
The point is we can twist data any way we want to serve our own ends. What really matters is not what has happened to other companies, but what we believe can happen with BAJ, and BAJ management's end game is in this. Many junior miners/explorers will consolidate simply to give the stock a little more life, delay bankruptcy a little bit longer, or issue more shares to raise enough capital to keep them alive until hopefully someone rescues them before they go bust. I find this is the case with many many exploration companies that have no way to generate revenue, the only way to get capital to keep going is consolidation and then share issuance.
But then there are those, like Catalyst and Coeur that do it for the long term benfit of shareholders, to reduce the float and minimize share price manipulation, giving a more predictable stock price. These companies have a revenue stream when they consolidate, and so i don't believe they are just trying to breath life into their companies, they have noble intentions in consolidation.
Where does BAJ fit in? Again, I don't know. I don't know what management's end game is. I hope it's not simply to give this stock a soft landing to bankruptcy. We do not have a revenue stream yet, but we are close- this is not like an exploration company who tries to raise capital through share issuance, even though they are miles away from revenue (still need to procure a joint venture partner, get an Environmental impact study, feasibility, study, engineering,... etc. done before they have any kind of revenue). BAJ has crossed all the major hurdles that would typically kill a junior, the only major hurdles to cross are construction completion and comissioning the plant. What we don't know is what our ownership will be. We know KORES is going to provide up to 200M$ to finish the plant, and if that full 200M is needed, BAJ would need to pay 20M to retain 10% ownership. Otherwise we'd be diluted to around 8%. Maybe they want to consolidate to 17M shares at 1$. Then issue 20M new ones at 1$ to raise enough money to retian 10% ownership. Personally, I'd rather take dilution in ownership than dilution in stock. We've already established that 10% ownership in this mine is worth $90-100M, so... say 20M new shares + 17M existing post-consolidation shares = 37M shares of a company worth $90M. Still not bad.
BAJ may end up being an exception, like Coeur or Catalyst, it may not. Thus the importance of doing your own DD, and seeing if you are personally willing to take the risk on this stock.
Hopefully the AGM will enlighten us as to managment's intentions and goal with this consolidation, if it even happens.
Disclaimer: All just my opinion, the reverse can also happen. Do your DD.