RE:RE:RE:RE:A Fire Sale !!!My thesis for some time now is that the fire sale on SCA is directly related to Acacia's troubles in Tanzania. Bear with me on this as I explain my view. ACA is not directly connected to SCA, but they are the lead operator in next door's South Houde exploration program with SWA, who is SCA's JV partner.
The whole concept surrounding SWA is that they will be a "consolidator" of property to put together the pieces for a big mining operation that would attract a larger miner. In this case, the most likely buyer of it all has been considered to be ACA.....but they are deep in the financial glue in Tanzania's extortion by the government there. So ACA's likelihood of planning a mine at South Hounde in the near future is probably about zero, and there is even concern that they may have to suspend exploration to conserve cash. That really messes up SCA's likelihood of being scooped up in a consolidation of Karankasso, South Hounde, Bondi and a couple of others to support a giant mining operation.
As a standalone operation, SCA's property has a long way to go to attract a buyer. These days, they would probably need 3 million oz to become attractive.....2 million oz bare minimum. So this price is undervalued because investors are saying "at this rate, Karankasso needs another 3 years of drilling to become salable by itself and I am not prepared to wait that long".
I bought in before the ACA troubles, expecting that SCA would become salable after this latest 2017 NI43-101 or at latest after the next drilling campaign ending in July 2018. That's not going to happen until the ACA problem gets resolved. The best thing that could happen would be for another player such as EDV or GOLD to come in and buy up the whole lot with the intent of producing in the near term. That would give ACA some cash as well. Otherwise, ACA's toubles hang over this whole thing.
That said, I may very well add to my position at the current price. At worst it will be a three year hold and will sell for multiples of the current price. Management is good, and no doubt they will produce the best result possible.
RedSox wrote:
No, I was not in any way offended. How could I be? and I am in no way suggesting you are a pump and dumper. I was just simply meaning to say I cringe when I hear the --> "Back up the truck on this one" phrase because that is a term overused by disingenuous people with an agenda regarding the security.
I cannot think of one speculative stock that is a sure thing no matter how promising it may be from a resource/metallurgy perspective. Too many variables come into play and all the stars must align. You are right though, from a very CRUDE calculation on the numbers, this stock is trading for about what it is worth in cash and assets. This is not even factoring resources in the ground so basically if you buy this stock now, you are getting Savary Gold's resources in the ground for free or close to it.
Additionally for what you can buy the stock at now is just about what Ross Beaty paid for it when he bought his 26 million shares back in 2015. Finally, Don Dudek has been buying on the open market steadily and has been accruing at much higher prices ( .08, .09, .10 ) which is a huge endorsement for the retail and accredited investors.