High River Gold Mines Ltd HRIVF

$2.50-$3.00

[cloudrunner]

German Article


HighRiver Gold: Takeover Offer?
AndrewHoose
Friday, 22.07.2011, 15:38clock
At one of ourlong-termrecommendationsfrom thegold sectoris doingafter along breaksomething:Howrecentlywas heard,wantsa major shareholderofSeverstalRussianshareholdersof HighRiver Gold(HRG.TO)makea new takeoveroffer.Some time ago,tried topurchase the Canadiancompanyhadalready failedonce.
That washowevernot surprising: the firsttakeover attempt, the Russianslaunchedtwo years agowith a bidof eightcentsCanadian(!).Later,the offerswereat22 centsandthen raisedagainto 30cents.Butshareholdersrejectedthe bidsfromeach.
Now thingsare slightlydifferent:Currentlythere is talk ofa takeoverbid of1.50dollars pershare certificateCAN,sothe currentmore than 28 percentabove the share price.Details ofthe proposed transactionare not yetknown.At the momentwe would bemore inclinedto rejectthe offer.
Althoughtheshare price over thepast twoyearshasrisenproperly.By industry standards, the Groupishoweverstillveryreasonably priced.At a price-earningsratioof about 7.5would bemoreroom forcoursesin the areafrom 2.50 to 3.00CAN $.
The price trendshows thatsooncould developa new push.For aboutnine months, the stockismore orless sideways.The 50-week moving averagewas lastsuccessfullyrecaptured(blue linein the figure below).
The recentslump inthegoldminescouldnothurtthe stock pricemuch.The relative strengthsuggeststhathereagain sooncould developan outbreak.Wewouldbuythe sharesbacknow.

[uranicynic]

I agree that HRG should be trading on a P/E of 15-20 times earnings. This is an easy two bagger from 1.20.

[ThyFish]

I agree but your calculation is off earnings which in my opinion have been stifled.  First there was the Prognoz write down and 4th qrt 2010 had a mill shut down which impacted earnings.  If we were to see a write up and full production, we could and should have earnings in the area of .30 to .40 per share!!  IMO  Even at a discount for all the slimeball moves a 10 PE ratio