stockzorg wrote: ranman wrote: A. Where are all the "big fish that were circling"? What benefit would TUD have to not bring one in on this PP? An investment by a major at this level would not seemingly loosen control, but it would bring more positive sentiment from the market. B. Why 3.60 for a third and 3.00 for 2/3. Is this what tud and tuo felt was fair? If so, this flys in the face of a valuation that considers what many on this board feel that the co is worth. Why not $4, or ATH, and what does this seemingly "low" pps mean? Was this a "gimme", or was it a "true FMV assessment mutually agreed upon", or a bit more far flung, did TUO have the big stick at the table as only game in town and dis they use it to lever a smoking deal? I am personally disappointed at the unit price of this PP. Imagine what it would have said to the market if it was $4 or ATH? That's what it would have taken for me to feel that this was a full vote of confidence by Dino. Just my opinion.
ranman - excellent post. Pointing out that Dino just made a major roll of the dice on Tudor based on a decision that was probably well-informed was right on target sir.
I understand your other questions. IMHO the big fish are still circling. Once you make a decision to jump into bed with one of them on a PP, some of the future potential for a bidding war goes away. From that point on, it becomes a difficult negotiation with the chosen partner (who has a lot more resources than you do) to arrive at the final buyout number. So you'd better be absolutely certain that the price is right when you make that call. My sense is that the price is not yet right. If the next PP is to Mr. Sprott or even retail, we'll know the price still is not right for this drilling season. Either way, I don't believe Dino was the only option by a long shot. I think Dino saw an opportunity to put his money to work on the best possible potential return in Tudor.
As to the pricing of the Tudor shares, I thought it was a good PP. The $3.60 shares were flow-through which have tax benefits attached and are worth more. The $3.00 shares were almost exactly at the market price that day. There were also no warrants attached to give Dino additional downstream preferred pricing - as a Teuton shareholder I didn't appreciate that, but for Tudor holders it was good to minimize future dilution. There was no reason for Dino to pay above market price for Tudor shares since he could have gone out to any brokerage and bought them for $3.00 on the open market. So I think Tudor got the best price they could.
When I look at this deal from the perspective of a major miner, I have a problem paying much more than $1 Billion or maybe $1.2 Billion for Goldstorm right now. I get to that number by taking the open pit Measured and Indicated gold only (Au, not AuEq) and buying that at about $65/oz. I would expect that any Inferred open pit Au will convert to M&I this year, so I'm thinking about 15 million oz. at the $65, and then a 20% additional amount (about $10/oz.) above that for everything else. So at $1.2 Billion, Teuton gets $240 million, or $4/share.
When I look at this deal from the perspective of Mr. Storm or Mr. Sprott or Dino, I see a buyout of Goldstorm at a minimum number of $2.4 Billion. I see the exploration this year adding significant Measured and Indicated resources and I would not accept a minimum $10/oz for everything else (including the value of TC as a tunnel route for Seabridge). At $2.4 Billion of course, the value to Teuton is $480 million or $8/share. So for me that's a good baseline number to use for how undervalued the Three Amigos appear to be at this point in time.
Do your own DD. GLTA. Doug