RE:RE:RE:RE:After the Long Weekendstalliere wrote: ...I believe if there's a half decent deal at some point the stock will rock back to $.30 level. What does mud creek think?
I think the Sugar Zone mine and mill will operate for years to come, and the employees, the suppliers, the town of White River, the current creditors, and the future owners will all benefit from it. I’ve been watching closely and trying to work out how I could benefit from it too, but I haven’t figured that out yet. It might work out well for people who buy in at the current low price, but then again, it might not.
It all depends on decisions being made by Appian, and BNPP at this stage, and the scary part is they can both make money off this even with the share price going way down from here. I don’t think BNPP has anything to worry about. Even in bankruptcy there will be enough there for them to come out whole. Their interest here isn’t tied to the share price at all. Appian’s interests do appear to be (partially) tied to the share price, but they have other ways to get their money (and more) out of this that don’t require a high share price.
I kind of expect New Gold to wind up owning the mine eventually. I think their investment was not done in the expectation of a share price increase, but rather was intended to put them first in line of potential buyers. Anyone else who wants to own this thing needs to get both New Gold and Appian onside. It would be nice to think that means they’d have to offer a high share price, and in a world full of integrity and honesty, that would be true, but that’s not the junior mining world. Potential suitors have other ways of getting those two onside that don’t involve a higher share price. And New Gold is in a better position that way than any outsider – they just have to get Appian onside.
In my fevered imagination, I can dream up a scenario like this: Any potential suitor is not going to want the future mine saddled with Appian’s offtake agreement and nsr, so you can expect them to make an offer for those too. What happens if someone proposes a takeout offer at a lowball share price, but simultaneously offers to buy Appian’s nsr and offtake agreement at an inflated price, and agrees to pay off all the debt (both BNPP and Appian), contingent on the takeover being accepted? Appian and BNPP will both be in favour, and will pressure management to accept. Since BNPP is in a position to force bankruptcy, they can certainly apply a lot of pressure. Minority shareholders could be presented with the option of accepting a lowball share price, or going through bankruptcy and likely getting nothing at all. The question is what constitutes a lowball share price? $0.12? $0.02? I certainly don’t know.
Or maybe a white knight will come along, or a bidding war erupt. Who knows? Not me. Like I said, I haven’t figured out how I can benefit from this, so I’ll just watch and try to learn.
Do your own dd.