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Bullboard - Stock Discussion Forum Duluth Metals Ltd DULMF

GREY:DULMF - Post Discussion

Duluth Metals Ltd > DM valuation
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Post by mayorkgh on Apr 01, 2014 9:32am

DM valuation

In December, TD's 10%NAV was approx. C$400 million. In September, Raymond James 10%NAV was more than C$800 million. DM's equity base is 150 million shares fully diluted. Even if they sell another 50 million shares at whatever price, this gives a share price range of $2 to $4. Presumably the 10%NAV will be increased by both analysts when the PFS is released, likely in July. DM has enough liquidity to get to that point and will then have to make some decisions as to how next to proceed. There probably wasn't much point in pushing the most recent financing at 65¢ if they don't need the cash at this very point in time...better to wait until the market is more receptive and until DM has a different story to tell. There is no doubt that Anto won't pay any more than they have to however that price will be determined either by the 10%NAV calculated in the BFS, which will be produced some time in 2015 but for which the PFS will be some kind of guide, or by a takeover bid, which will give rise to a competitive situation between Anto and another company. It's all a question of timing. Probably the worst case scenario is another company offering a buyout at a 50% premium to today's share price i.e. $1.00 or so, which would sound fair in the headlines but which would understate the real value substantially.
Comment by redmetal on Apr 01, 2014 11:23am
If Anto chooses to buy 25 more % of Duluth they will pay 25% of the NAV.
Comment by yoda2 on Apr 01, 2014 1:04pm
mayor: Would you help by clarifying/commenting on four points that arise from your BB: Is the price of the 25% buyout option based on the PFS or the BFS? Could there be a big difference in valuation and maybe more importantly timing? One hopes the PFS will be available this summer although these studies seem to be late quite often. It seems Anto might control/influence  both the release ...more  
Comment by mayorkgh on Apr 01, 2014 2:18pm
Anto has an option to buy a further 25% (i.e. in addition to its current 40% holding) based on the NAV@10% discount value of the BFS...not the PFS. I don't however think there will be much difference in the valuation between the two...under normal circumstances. If Anto waits until the BFS and triggers the option, they will pay DM 25% of the 10%NAV. DM will be left with whatever cash that ...more  
Comment by yoda2 on Apr 01, 2014 2:32pm
mayor Thank you -- very helpful.
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