RE:RE:RE:RE:RE:Western Canadian ExpansionThe joint venture is a good fit for both companies. Nordex has developed some rather worthwhile technologies (the bulk emulsion delivery system for both surface and bulk underground loadings. Their Scorpion system is just in the beginning of getting the recognition it deserves and have aquired others principally the Buttbuster and Econotrim and the high quality electronic detonators. These products can readily be incorporated into the Pacific Group's explosives domain. There are many blasters who are thoroughly rankled by the treatment they have received in the past by the world's largest explosives companies. Truthfully Nordex's offerings are more miner friendly.
Nordex has all kinds of excess capacity. Once their base load is taken up as it has been profit margins should start to climb rather rapidly. With the larger base of operations that the joint venture has certain economies of purchase will also happen. PGC will help to make this happen. At present Nordex has all kinds of excess capacity to manufacture the Johnex line. PGC provides that market outlet which would have taken far longer to develop otherwise.
I like the fit, more and more, each time I think about it.
Will PGC make a buy out offer someday? Maybe, I hope not, at least not any time soon. Also, Johnex and others would have a say if a +50% controlling interest occured.
The stock is cheap at approximately 6.5 times earnings and 86% of book value.
Makes a person wonder where all the $131,142 in advertising dollars were spent in the past 6 months as the stock price is in a horrible way. They could have gotten much better bang for the buck by issuing a cash dividend of $0.01 to shareholders.
B&D