RE:JV on Galena with Eric Sprott cyanide5,
Your instincts are absolutely correct. This deal with Billionaire Spott is a super good deal for Sprott, but not so good for the retail shareholders of USAS.
Let's assume gold goes to $3000 USD per ounce and silver goes to $60 USD per ounce.
Americas Silver profit before the Sprott deal with production from Relief Canyon would be 32 cents USD per share. With the Sprott deal on Galena, profit per share drops to 29 cents.
That is a 10 percent perpetual profit hit for a $20 million dollar initial investment. Why didn't Blasutti just print 6.7 million shares at $3 USD per share?????????? Seriously????!!!
It would have raised the same amount of cash with no dilution of future earnings?
so let's assume gold goes to $4000 USD per ounce and silver trades at $60 USD per ounce.
Guess what? USAS investors wind up with 55 cents per share profit instead of the 61 cents per share that they could have got without the Sprott give away. So here's a CEO who was adament about keeping his silver in the ground because of low silver metal prices, but has no concern about giving away 40 percent of future silver value at Galena?!
Excuse me, but I do not understand this move, but I am glad that
I don't own any USAS shares at the moment. Because, if I did, I would be seriouly miffed.
IMHO, Americas Silver's CEO has some serious explaining to do.
Blasutti's strength is as a deal maker and a compulsive company acquirer, so I expect him to acquire another gold producer to cover up this mess on the Sprott deal with Galena.
Next on deck to be acquired: either Scorpio Gold or Orvana Minerals!