Awarded - Great Forward Thinking QuestionsLurk & Learns + Awarded: Again kudos to Quakes99 for continuing to lead in the most relevant discussions on this board. Surely his discussion on the reverse split (aka consolidation post merger) is worthy of inclusion in his extensive (140+ entries) library. The more we can educate/inform, the less likely the naysayers &/or bash and buyers can purloin from the weak hands/knees/stomachs.
RE: "One of the reasons why I held onto my FUU shares is because I expect Ross and Dev to become more involved in it once FCU is taken out."
While I try to stay away from making purchase and/or voting recommendations; my only comment here is Ross is presently the head of an exploration team and said team is not static; said team solely by osmosis and if proceed to merger (bolstered by DML explorationists) would be more than capable of continuing their enviable record of success still under the direction of Ross.
In my earlier (spring) posts, I highlighted the significant upside to be derived by a combination of the two exploration departments vis a vis the REPLACEMENT POUNDS required by the market (Chindia) once the known deposits are exhausted 20+ years into the future. See also recent (July 27th) interview with Ross & Maurice as posted by Rover90.
RE:"If the proposed merger goes through, Ross and Dev will be very busy with the merged company and have little time left for FUU."
When we think of all the terms and conditions of the proposed merger, the one that does strike me as more than idle curiosity is their proposed management role in MergerCo.
Based on over 30 years of experience parsing M & A's announcements, this one takes head shaking and head scratching to another level. I've seen Accountants, Geologists, Metallurgists, Technologists given top jobs; only if they were experienced in development (pre-production) and operations. In this role, anticipatory & experiential are two possible prerequisites to longevity of tenure.
This proposal comparable to having the navigator on the QE2 given the reins of captain & vice captain of the ship. An extremely difficult transition indeed. "Contingency rerouting" is the only explanation that makes sense. Only time will tell who is right. Temporal or eternal?
In an ideal world, in operations (& development) it preferable to have someone with a professional designation followed by, first line production experience, then mine production superintendent followed by general production superintendent (responsible for mine & mill), topping it off with general manager's designation (responsible for total site management). Meaning this path to the top is curious at best.
Conversely, another interpretation being the proposed merger was rushed over a weekend complete with the 1.26COR with attendant minimal reporting triggers.
Lurk & Learns are encouraged to list those that have made this transition at the T2 level (exploration to operations) with a similar experience curve. Lurk & Learns must question what institution would vote for this and the 2:1? Was this the reason that some voted with their shares to bring us where we are today? On the bright side, while not privy to the "end game" the fun is in the speculation (without the name calling, libel and innundos) could it be LL's control of Mergerco strategy? Establish a dependency/loyalty?
RE:"Because I hold both FCU and FUU, I hope the merger fails, someone else takes out FCU at a good price, the FUU goes on to find new deposits." Over the years, the term I like to use is, "contingency rerouting". In order to address the "curious" decision on the proposed management structure, I believe from the recent enlightening discussions on options on this board, we could have at least two chances to transition this perceived "contingency rerouting" to some form/semblance of conclusion /avoidance/ transition/ normalcy.
Luckily for them, those with common sense may speculate that recent commodity GLOBAL correction c\would produce more eminently qualified candidates to lead the merged entity. Leaving to move into the Lundin Group or lead FUU. And it almost never pays to hire management consultants to tell you what you should do only to confirm your own intuition.
In "contingency rerouting" e.g. on a four lane highway looking to repair a bridge, in a Stage 1 scenario, the traffic could be rerouted to the other lane on the same two lane or Stage 2 the traffic is rerouted over to the on-coming lane using a "cross-cut" arrangement, slowed incoming traffic and lots of pylons.
Now that I have completely confused:
Stage 1 - means that based on a blockbuster PEA and continued spectacular drill results and/or an acceptable offer that Dev cannot duck.. FCU can be sold (i.e.- . for the naysayers this would be called a sale). B4 the DDD for a $14 mln break fee.
Stage 2 - is where despite all efforts, no bidders emerge from the sidelines and the proposed merger is now a definitive/actualized merger. Dev kept mentioning that this is what his counterparties kept asking for. i.e. he could have had an (deep pocketed entity or consortium) request to himself or LL or both to bring the two assets together in order to minimize FIRA & CNSC review. Someone had two "negotiators" (Lundin's or DML) with them? We can only hope that they're protecting the assets while a deal is being finalized?
Either of Stage 1 or 2 (above) and mutations and/or variants thereof c/would extricate Dev & Ross from the "curious" post merger appointments to the DML "execuatarium". Temporary or permanent appointments? Risk of getting, "paved over"? FUU (parachute?) becons them to stick to their knitting?
Point being, if they don't hire someone with the journey (man/woman/person) experience their REAL intent is to have deal number FOUR under their belts. Failing that they would be placed in a situation where one false move WILL knock them off their pedestals (earned for exploration and deal making); as many b4 them have learned that hard way that successful explorers NEVER can guarantee/assure successful transition to that developers much less producers. Foundations are poured and then cured over time.
Presently, U is in an over hang/supply. Post merger assets in the Eastern Athabasca is closer to production than those on western side. If we make a (post takeover) spreadsheet to the reclamation stage, a merged entity c/would appear more attractive based on the location of a possible 8 mln pounds of mill capacity; (see Ross's recent blog) then if not bot out at a substantial premium by someone getting nervous about losing out on the transition to the best deposit on the planet west side in the latter part of the LOM.
Bottom line is for Mergerco to become a serious alternative destination/contender for the inevitable cash flow to T1 Cameco MUST have all three stages - Exploration, Development & Production. An institution looking to diversify (pyramid) in U may want to establish Cameco as a base with the "torque" coming from an upstart U in the form of Mergerco.
Now get this parallel... presently the FCU diehards (declared NO votes) want to retain the "torque" from PLS without protection from a (hostile) low ball bid. Post merger, mergerco (the YES vote) c/would still be faced with the same debate albeit in a higher spot price (not contract) environment/level as some deep pocketed entity with a 20+ year time horizon could be "sitting in the bushes" or "coming to terms wrt a plan of arrangement".
BWDIK? Does FCU as is (NO vote to merger) trump a "blue sky" Mergerco?
DYODD - GLAP
Cheers
Stanley