5,6 CAD is likely the top for the next couple of weeksAs much as I like the company’s potential and its execution on the mining front, it is worth spelling out that the actual price for the capital increase was not 5,6 CAD but closer to 4,7 CAD, as the option value of a call with 3 year tenure, 6,5 CAD strike price and historical 3 year volatility of 48% is nearly 1,8 CAD, thus this deal was placed with a discount of around 20% to Friday’s close.
My issue with management is that rather than providing a clear investment case for the additional funds with a one and done cap-hike that is sufficient to funds either marmato or toroparu, we are getting this piecemeal approach ... They should look at Teranga’s financing of the Massawa acquisition as example of an attractive transaction.
With a little weakness in gold we a very likely to see pressure on the share. Isn’t it highly attractive to sell the shares pretty much at your entry price and still retain half a warrant for free? In my view the stock is capped for the next couple of weeks at CAD 5,60.