RE:RE:RE:Amazing disappointed
I'm amazed at how little appreciation there seems to be on forums for "each other's" project. Eclipse shareholders feel they were sold out, but don't seem to realize they are now also exposed to major near-term upside from the Moss exploration. Northern Vertex shareholders are not happy about the particular deal since it's a quite long-term horizon for the Hercules project. But if these phase 2 drill results are confirming the thesis of Hercules then it could be a multimillion ounce asset at a cheap price.
So upside in the near-term on both fronts.
And I guess neither set of shareholders are really happy about the 20M financing. But from an NEE dilution perspective it's "less bad" than it might seem. Those 19.5m Maverix warrants were due to be converted anyway so NEE shareholders would have been diluted for 19.5m shares raising 7.8m (or more, since more warrants are expiring). Basically the end result of the transaction between maverix/nee/eclipse is the creation of 40m NEE shares raising 18.05m (so money raised at 45.125c). Plus the current outstanding eclipse shares converted to NEE shares of course, but you can consider that a current value translation with the end result of NEE being valued at current NEE + eclipse. But so compared to a standalone NEE scenario 20.5m extra shares are created, and 10.25m extra cash is raised.
Last week the creation of 37m CD shares was bought off at a price of 2m USD, so from an NEE dilution point of view we still come out ahead, really.
So considering the currently outstanding eclipse shares just a 1-to-1 translation of current value, the cost of this merger for NEE shareholders is an extra 20.5m extra shares, offset by a gain in cash of 10,25m. It's a merger really, and not an acquisition. Whether it's a good deal depends on how the 1+1 evolves. For NEE I'm convinced the 1 will grow. For Eclipse I guess it all depends on the phase 2 drill results at Hercules, or how much you believe in that story. Eclipse shareholders seemed to believe in it to the extent they are now furious, so who are we to doubt as an NEE shareholder? :-)
I also understand this is not necessarily the end of the M&A story. The combination will serve as a base to do further M&A, which would then likely be with other producers (or near). So the longer term funding of Hercules may be spread over multiple producing assets.
I also understand the stock will graduate to the TSX and they plan to upgrade the US listing now that there's a second asset. So that'll be interesting for shareholders as well to create some more liquidity.
What worries me a bit as a northern vertex shareholder is the months of delay in the Hercules phase 2 drill results. Due to slow nevada assay analysis labs? Hmm. That, and I'm not yet convinced of Mike Allen. I watched a couple of fumbling presentations yesterday. Also some good ones though. But i heard several projections on those drill results, none of which apparently came true. Maybe this merger story held off some of the news reporting over the 20d price evaluation, but then we'd better see something soon.