I-80 value
I'm having trouble figuring out I-80 and would appreciate any constructive criticism/insight re numbers I'm playing with.
First, the non-controversial: At $13.20 Equinox one will get $2.60 worth of EQX and so with Premier at $3.10 that's 60 cents attributable to the .4 share of I-80. Therefore the market is valuing 1 share at $1.50 Cdn. or about US$1.17. (.78 US = $1 Cdn)
As it stands, there will be 102 million shares of I-80 on conversion from PG. Plus an issue to raise approx $75 which at $1.50 would be 50 mm shares. I see in the takeover presentation slides that Getchell is supposed to cost $23 mm cash and US$27 mm in shares. I will exclude Getchell from my calcs as I assume it's being acquired at fair market value.
I'll get back to the new issue but for now, we've got 102 million shares and 2 assets: McCoy-Cove and 40% of South Arturo. From the presentation, they say that analyst concensus is that S.Art. is worth US$175 million. This kind of fits off hand comments from others that S.Art. is easily worth Cdn$200 mm or more. I see that S.Art has M&I resources of 325,000 ounces at last report and 104,000 oz inferred. I like to think that an inferred oz is worth only half a M&I oz so let's say 325 +52= 375,000 ounces. Big assumption: this is net to their 40% interest. So, $175 million divided by 375,000 oz = US$466 per ounce. Seems pricey. Would mean that South Arturo alone would be worth US$1.71 per share pre capital raise.
McCoy-Cove has 342,000 Indicated oz and 1,322,000 Inferred. As before, total of 1,003,000 oz. From their FS or PFS, an after tax net present value of $142 million. Another US$1.39 per share. Now we're up to $1.71 + $1.39 = US$3.10 per share. Allow a market discount of 25% and you still get US$2.32 or Cdn$2.97.
So unless the implied price of I-80 doubles, the new issue will significantly dilute the Premier shareholder who justs sits there and collects his new shares. Seems to me you gotta participate in the new issue. To be fair, this should be done as a rights offering.