Takeover........Not yet...I have had a number of people PM me asking what I thought about an NSU takeover given its valuation, and then the usual conspiracy questions.
As I have said in the past, I strongly disagree there is a conspiracy to drive the stock down and I really don't want to rehash the arguement. Its a topic that pops up on literally every SH thread when a stock is underperforming. Instituational shareholders have the same goals as retail ones. Unfortunately, sometimes they are privy to a little more info but they have to answer to their shareholders when they underperfom too. The logic of them pushing the share price down for a takeover makes no sense because they get screwed just like everyone else and although some don't believe it, the compliance is very tight on such holdings. There are no wash trades, upticks, downticks, crosses to dark pools etc. It just doesn't happen with companies with a capitalization of a billion dollars . Regardless, there will always be legions that belive the insitutionals are screwing the little guy, so believe what you will. Its an old and tiresome debate.
As for the probability of a hostile takeover occurring on NSU, I would say its unlikely in the near future. From numerous conversations I have with people that should know, NSU is being very conservative in their projections for copper recovery. That said, they will not come close to hitting the original 50m target this year set out some time ago. They should have very little difficulty hitting the 15-20m number they threw out a while ago. That being said, Eritrea is throwing off cash and will throwing off more next year. Unfortunately, although Bisha is a very prospective operation, it has limited marketability and still would if it was twice the size. It has nothing to do with finance and everything to do with politcs. As for Timok, it is very marketable to a limited number of firms rigtht now. The LZ nowhere near proven up and a bidder wouldn't have the contol position anyways. The UZ as it stands is too big and complicated for a small player and too small for a major- to move the needle as they say. It is only attractive to mid size players right now. Of those mid sized players, a gold company is not interested because although there is significant gold credits, this is a copper play. There maybe a handful of mid sized base metal players with the capacity to swallow this pill, so really, there aren't many.
If a hostile bid comes in, the premium will be large, everyone knows this so no one is coming in for the low ball. It doesn't work that way. Running the books and making a hostile bid is a ton of work with a lot of peril on the bidders plate if it falls apart. There are tons of examples of very cheap resource stocks now and in the recent past, yet hostile bids are few and far between. Think about that, the risks and liabilities are huge on the bidders and they often are themselves put into play when the deal fails. NSU is very institutionallly held, and from what i am told, those players have comitted to much higher valuations than here.
Unfortunately, our shares are the victim of an information deficit, poor IR, and some short term production problems. We have a lack of interest in the stock mixed with steady selling from a takeover, production problems, and management created issues such as the dividend cut that brought a whole new wave of selling.
Some food for thought is this: If someone is trying to make a run at the company or gain some control, why has no one tried grabbing the shares that have come out during the index deletions? All someone has to do is call the trade desk for whoever is handling the transaction and cross the block out, but in both cases, the stock has been puked into the market. There was no bidder either time.....that should tell you all you need to know about the shortvterm supply and demand for NSU shares.
I am long and strong, but wading through the $hit.....cheers