RE:RE:RE:RE:RE:RE:RE:RE:RE:Sprott said why he sold on his weekly wrap upone thing management can do is to offer to buy back all of the warrants from sprott for something like $5 million or less, while he is in the mood to sell right now before the share price goes up. sprott makes a profit while gcm takes a short term loss but that is better for the long run to get rid of the dilution overhang that
suppresses the share price. if you want to know why gcm share price is so undervalued, one major reason is the many warrants that are dilutive suppressing the share price because those are extra shares that potentially can be sold whenever the share price goes up.
that buyback from sprott would eliminate a lot of the warrants that is making gcm appear to have a large loss on the financial statement whenever the share price goes up.
exploration companies desperate for cash are the ones who need to give away a lot of warrants. profitable producing companies like the peers of gcm do not need to give away a lot of warrants that increase dilution. if gcm wants to be valued like other peers, it should act like them and stop giving away so many warrants and stop engaging in transactions that create a lot of dilution.
invest234 wrote: serafino,
i think most people would agree that gcm has done a great job operationally increasing production and cashflow.
but people are not complaining about the operational sidre, they are complaining about the financial instruments side. gcm has given out far more free warrants than any other peer company, to the point that the warrants are making the financial statement appear like gcm has large losses instead of a large profit as seen in the latest q2 statement. the gold notes also contribute to this appearance of non-cash loss.
it is dilution that most people complain about, and that can be controlled by the company. gcm gave sprott shares at below market price, it was not necessary to give so many full warrants on top of that. the convertible debentures are dilutive too. a large percent of marmato was given away to get an empty shell company. financings of caldas give away free warrants. in the upcoming caldas gold notes, the gold kicker is the bonus that give those holders a much higher interest rate than other debt instruments. it should not be necessary to give them free warrants too, a bonus on top of a bonus. if GMP is advising gcm to give away so many free warrants (way more than other peer companies) and dilute shareholders, maybe different financial advisors should be used.
i usually say positive things about gcm, but in this case the negatives have to be recognized in order for things to change, and serafino has the power to make those changes for the better.