Post by
MudCreeker on Nov 01, 2021 11:32pm
Not pretty. Ugly actually.
Ugly news release.
The key sentence: "the Company does not expect that the Strategic Review Process will result in a transaction which would provide any value for holders of Harte Gold's equity securities"
Management thinks the shares are going to zero. Best quarter operationally ever, but, like I said a couple months back, they could hit a ten ton pure gold nugget down in the mine and it wouldn't help at this point. It's too late for cash flow to rescue this. It's all about the negotiations, and those apparently are not going well.
Appian? They have millions of shares, and will be getting 20 million more this month. Now management is saying they'll get nothing out of all those shares. But Appian also has debt, NSR's, and offtake agreements that they got on very favourable terms, which are also worth a lot as long as the mine operates. I'm not sure if the NSR's, offtake agreements, or BNP's hedges, would survive outright bankruptcy, so I suspect both of those players are trying to avoid that outcome. Even if the ultimate share price agreed to in a "transaction" is $0.00001, they'll want it to be non-zero, just so the successor has to honour those other agreements. Management telling you that your shares are going to zero might be preparing you to be happy to accept a very small non-zero number.
Both BNP and Appian are involved in the negotiations as debt holders, so they get to protect their interests as best they can. Harte's management is there too, charged with protecting shareholders' interests, but they have no leverage, and have just told you where they think shareholders are going to wind up.
New Gold? The shares they currently own are a write off. With a market cap of a billion plus, it's not a catastrophic write off for them - something like $0.02 per share. But fact that they bought those shares, just a few months ago, implies they are interested in the operation, potentially as a buyer. I wouldn't be surprised to see a transaction where they wind up buying the rest of the shares for next to nothing.
Just the musings of an interested outsider. Good luck all.