RE:RE:RE:RE:RE:RE:******* WARNING MASS CAPITULATION HAPPENING IN RCG******Hey guys - wow that's a lot of posts to weed through :-)
Not a ton of actual content, mostly just discussion, which is fair enough.
I've had a number of discussions with Damian on an ongoing basis and have posted most of what we have spoken about, but not all. You guys have touched on a couple of topics, but I'll try and explain the rationale behind what I see as a couple of options:
- Consolidation / financing - from what we've seen on the markets, the potential for a consolidation and then a financing at what equates to the equivalent of a 5 cent financing has potential. At this juncture this would only make sense if the people taking it down are going to be the people essentially running the show going forward. A 5 to 1 consolidation at 2.5 and then a financing at 10 cents would potentially change the balance of power sufficiently to make this viable. I have been told this is not actively being tabled, but again the company has admited that it may be a viable path.
- Sale of Forrest Hill - the project has merot and appears to have the potential to actually have sale value. If sold it would "possibly" provide enouhg of a kick to get Duffering and Tangier into reasonable production. This only makes sense if the company is pretty sure that it is enough to get to sustainable production at a level that will float the company. Have been told this is not actively being pursued, but company did admit that it potentially makes sense to them, if the price is right.
- Merger / Acquistion - if they can negotiate a deal with a complimentary mining entity, then this potentially makes sense. A financing could potentially be executed to handle an acquistion, with enough additional funds to allow for the kickstart on Dufferin and Tangier, as well as the acquisition. A merger with another company that has sufficient funds in place to handle the kickstart would be another option and either merger or acquisition would potentially provide an opportunity to address the need for a CEO as well. I have been told this route is definitely being looked at.
- Bankruptcy - if the Sprott group has simply decided that they do not want to deal with the existing shareholder base and the current management / board and are unwilling to put any additional cash in to get this back in gear, then there is (IMO) the potential for bankruptcy. Sprott financial funded the company in a none share related financing vehicle and that was secured with the property - if they are done with the company, they would retain ownership of the projects and that may seem more appealing - depending on the current relationships. I have been told this is not currently being considered, but that doesn't mean it is permanently off the table as an option.
Thoughts regarding buyers sellers and insiders / directors / board.
- a significant upswing in general insider holdings would typically be considered a good thing, but how much it means depends on exactly who is responsible for the change and how they got the shares - open market buying tends to mean more. An upswing in holdings can be nothing more than exercised warrants to help sustain a pre-existing investement.
- who the buyer is and if they are "in the know" typically means more than who the seller is. A buy is always a choice, whereas a sell may not be.
- a significant buying base often times comes from pre-existing shareholders, who do not have appreciable quality information, they have just decided to average down and hope for a turnaround. This type of buying means very little. If the buying is being done by insiders (ones that have access to real quality information), then the buying quite possibly has meaning - at least suggesting that the share price is at a point where even after a consolidation it will have been an advantageous acquisition.
I have been told that Dufferin is only operating with minimal staff, so revenue has to be fairly muted still and was told the work on Tangier has also been minimal (just enough to satisfy license requirements).
I hope this helps. I cannot definitively tell you what's happening, as no one has been willing to shine a light on the actual path ahead, but hopefully the perspective still helps.
Salut - Leigh McBain