RE:Novo becoming "the New Gold Major"Hello goldy,
Just a few comments.
- Key point: Even if KL and NOV are merged, the combined company would not be qualified as a "major". At least, not yet. Or, if it can survived as a combined entity without being swallowed up by a real major company such as NEM, G, ABX, AEM, etc. (only gold companies are included here, other companies such as BHP and Rio Tinto are bigger, but they would not be interested in a gold play).
The combined Market Cap would be of the order $5B assuming $2B the Cap for NOV (which is quite generous, since it's currently at ~$1B).
- Warrants:The wts should be added to the holdings of both ES and KL (over 14Mwts for ES and 14Mwts@6.00 for KL). If they are included (i.e. exercised) the combined holding of ES and KL would be over 45%NOV. So, it would be simpler for ES to have a go at NOV, and if he and QH are in good term, they can just keep NOV as a subsidiary of KL (so it can raise money from the market on its own, and QH can continue to run this ship).
- KL: It's a mid-size low-cost producer (500,000 oz/yr) with a Cap of over $3B. It's well run with a major operation (Forsterville) in Australia. It would be better, not to upset the current structure (Principle: If it ain't broke, don't fix it).
- How ES preserve his holding in KL: His holding in NOV will most likely add more to his holding in KL after ther merger.
- Speculation 1: When ARV will be absorped in the the KL/NOV package? Why bother entertain a 50-50 JV if you can have it all? The current Mkt Cap is ~$146M. If NOV danggled 100% premium, i.e. around $300M for the entire company, I would say ARV shareholders would take the bait. $300M would be a fair offer for 50% of Purdy's (assuming ~4Moz for ARV, i.e. at a price of about $75/oz in-situ).
- Speculation 2: A major, NEM or G or ABX, etc... would not be able to resist the KL/NOV/ARV package with a production of 500,000 oz/yr plus a" blue-sky" resource of over 10B oz.
Bidding war anyone?
GH