DilutionI always thought dilution was increasing the number of shares. It’s the only way developers/juniors have to make money. I agree with Manson’s PP this week. A few weeks ago we were around the $1.50 mark, went down like everyone else during the crash and recovered nicely. We all thought we were undervalued and now we know. The PO was oversubscribed by a factor of five. Some think a buck fifty was too low but you buy in bulk, you get a deal. There is lots of dilution to come. We have a mine to build at $272 million. Let’s say 300 to make the math easy and allow for inflation. A likely financing split will be 60/40 debt/equity. This means selling 80 million shares at $1.50 or 60 million at $2.00. Plus borrowing $180 million, which should not be a problem given the economics of this project and the 1.8 year payback. Someone has to do this, whether it is Marathon or someone who buys us. The thing is, we have a nonrenewable resource and the PFS gives us specifics on what it is worth. The upside is the price of gold and finding more ounces. Gone are the days of Phil going out trying to sell 5 million glow through shares to do some drilling.
There is a debate on the merits of the company building a mine or selling to a mid tier or major. Some say there is more value over the long run in the former. I hope we get bought. I am retired, I have a limited timeframe for doing the things I want and I don’t want to wait. That does not make me stupid or rediculous. It is just my personal situation. So for me, let’s get sold before the banks take their chunk of ownership and the dilution gets beyond our blue sky.