RE:RE:RE:IIROC Trading Halt MXI.V August 5 @ 4pm IamGold Q2 Report ?!All great points RR.
August/September is really the first and earliest point in time that a buyout could occur as the drilling on Diakha to date is likely quite adequate to provide a clear picture for both parties as to what is there. IMG could present the final drilling results to MXI along with an offer.
From IMG's perspective, the Diakha deposit is now de-risked....no mysteries there now. This would also be the least expensive time to buy MXI. As they discover more ounces on the properties, particularly the 100% owned Karita or a potential Diakha boundary extension, MXI may become prohibitively expensive. Even with the release of the rest of the Diakha drilling, MXI could start getting expensive if the results moved the share price enough.
Also, at this point, IMG could offer a paper share deal to MXI shareholders that would both conserve their own cash and not overly dilute their own stock. As the value of MXI rises from future drilling, the options for IMG become more limited because IMG is currently embattled with survival issues in this low gold price environment. Right now, IMG is stuck with bad oil and currency hedges, but didn't hedge gold when it was profitable, so they are really being squeezed and can't afford to make any mistakes or pay too much for anything as they usually do.
Another argument in favour of an early buyout is that MXI will be raising capital to drill out Karita. That means dilution and more expensive shares to buy out later. For example, if MXI issued 20 million shares at .20 to drill Karita and got good results, that would mean IMG would proabably have to pay (for example) .50 to buy back those 20 million shares costing them millions more than if they just bought MXI and drilled Karita themselves.
I think it would be the smartest and most accretive move on IMG's part to make a move on MXI now. For MXI shareholders, given the propects there, we would probably do better in the long run to sell out later. Obviously though, a fair price at this time can't be ignored either.