RE:RE:RE:Ellis Martin Report: Western Copper and Gold !No Marine2, we don't need to have the share price at a set level to "justify" a certain negotiated buyout package. In fact, the share price is REACTIVE to the buyout price tag, NOT vice versa!!!
A simple example will elucidate this for the peanut gallery: Let's say you want to buy a can of Coke from your local convenience store. You may pay $1 for that can of Coke. Now, what if you wanted to buy ALL of the Cokes available? This would be akin to wanting to take ownership of the brand and their production facilities. You gonna get that for a mere dollar?!
Same with stocks trading in the market. So, two yahoos on any random day hook up on a trade for 1,000 shares. Is that really indicitive of what the true cost of buying the entire enterprise will be? Of course not. I keep trying to hammer this point home to everyone: the daily trading price of WRN is nothing more than minor trading at the margins by a small fraction of the entire share base.
Furthermore, Paul is already on record stating that RIO isn't even looking at the silly headline NPV that was produced last year. I get the vibe that the PEA was produced as a matter of authenticating that "we got the goods" for all parties who may bid (including RIO) on Casino. Let's call it a procedural step that has nothing to with how the BoD will negotiate with the suitor(s) when the situation is already fluid enough given increasing metal prices and the possibility of multiple parties interested in WRN.
I care about two things really: What are the metal prices doing in that critical month period when the negotiations are being finalized and how many parties are bidding on Casino? That's really all that matters. The higher the metal prices and the more bidders = higher buyout value.
That being said, I am still sticking to my double digit price tag with $15 being my "split the difference approximation". Or for those looking at the conversion ratio, my 0.2:1 exchange ratio I've been expecting. If we have a $2,000+ gold $5 copper and multiple bidders scenario, we could easily breach that $20 a share target. Let's see what happens........