OTCQX:CBLLF - Post by User
Comment by
PeterHHon Jun 12, 2018 6:45pm
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Post# 28162479
RE:RE:RE:Questions about Cobalt 27
RE:RE:RE:Questions about Cobalt 27So based on today's closing price, which is below the bought deal for the $300M ($9.60 close versus $9.75 bought deal) the market cap of the company will be $787M CAD. To put this in perspective, the cap was over $700M in March based on the $13.60 share price before any of this. Meaningless fact but a clear sign the market doesn't like the $9.75 CAD dilution. No surprise here... I can only imagine how pissed buyers at $11+ would be... I've seen bought deal well below the previous day trading price (3%-8%) but this was 15% off of Friday's closing price. Todays market cap ($500M - the bought deal has not closed yet) is also 10% below the $555M of equity at March 31, 2018 (all of which is cash and physical cobalt against a tiny amount of liabilities). Obviously a lot has happened in the past two months including the Ramu deal but all in all, these are some starting points for valuation (yes, largely useless I know). I'm struggling to put together an accurate balance sheet at this point but here is my best bet for now.... this is back of the napkin...
They had $194M of cash on hand at March 31 but the Ramu deal costs $145M so they would be net cash of $49M. The CAD value of the Vale deal is $390M. The capital raises $300M (safe to assume the overallotment won't be happening at this point) so that will leave a $90M hole paid for with the $49M of the net cash gone and $41M drawn via the credit facility.
So the company has ~ $300M of physical cobalt based on todays price, the Vale and Ramu steam deals (as well as the other small ones) versus $60M of total liabilities (including $41M of debt via the credit facility). This all based on a market cap of $790M. Seems fairly compelling but I have no idea how to value those streams..... I will say that with regards to the Vale deal, the Wheaton Precious team is incredibly astute and has built an unreal empire. This is a $10B cap company. Based on my assessment, the deal terms for Cobalt 27 are the same as Wheaton which is encouraging.
I'm trying to figure out more about Milewski and Cochrane. As of YE 2017, it appears they only held 90K and 45K shares respectively. That’s not exactly encouraging.
Thoughts?