Fiore Gold Ltd. FIOGF

if warrants expire, stock will probably move higher

[blackgold14]

There are currently about 23.3 million warrants outstanding can be execised by the holders until September 26, 2020 (14.7 million at $1.70 and 6.6 million at 1.77 each).  If all of the warrants are exercised they would generate total cash proceeds of about $36.7 million.  

Does the company need the cash right now ?  No.  It's balance sheet is solid and the cash position has been steadily growing for the last year and is expected to continue to grow at a higher rate as not only has the average gold price per ounce sold has been growing but the operation is becoming more efficient resulting in a lower cash cost per ounce. 

Since there are about 100 million shares oustanding right now, the extra cash of $36.7 million generated upon full exercise of the warrants for the extra dilution of another 23.3 million shares would not be a good tradeoff for the company.  The company doesn't need any cash now and within the next 3-6 months, it will otherwise be able to raise equity at over $2.00 per share even if the price of gold remains at the current level - the reason is that there is a high likelihood that the company will report record production, revenues and cash flow from operations for the next two quarters.    

If the stcok remains under $1.70 for the next two weeks, there won;t be much of an incentive for the holders to exercise the warrants since the instrinsic value of the holding would not be significant.  However, if they truly believe that the company is a solid long-term investment, they may exercise the warrants to hold a substantial percentage position in the company.  

I'm hoping they don't exercise those warrants.  In that case, I'm expecting a sharp adjustment in the share price to follow beginning in the last week of September/early October.  

I bought around 30 cents about a year and half ago and I continue to hold all my shares.  Along with my shares in Fiore, my other core position is XAG, a mining royalty stock.   Another gold producer I am keen on is Northern Vertex -  I call it mini-Fiore because it is finally growing its production, revenues and cash flow in very much the same manner as Fiore and the two operaions are actually located quite close to each other.