Conclusion fm ALPHA Conclusion for Investors
There's still plenty to learn about this stunning move by the Timmins board, but initially we see both the positives and the negatives in this announcement. On the positive side, Sentry Investments seems to have gotten its previous wish and removed the founder and CEO of the company which leaves the company open to a direction more amenable to Sentry Investments. In the past this has meant considering acquisition options and we wouldn't be surprised if that is the case now.
On the negative side, the company will be taking a large impairment on its assets and will announce the details, as well as a new mine plan, in its third quarter earnings.
Investors will have to decide whether the positives outweigh the negatives here. In our opinion, notwithstanding a complete negative revaluation of San Francisco, the value of the company's assets is cheap enough to take the risk here. The fact that the company's largest shareholder is behind the move is another positive though as they have significant skin in the game and are much more likely to work to maximize shareholder value here. A lot of risk and many unanswered questions left, but it should certainly be interesting - investors should stay tuned.