Post by
p.yu on Mar 19, 2018 8:11pm
Dazed and Confused - Nope! Revised
Well, after reading many of these posts, it appears many on this board have much higher ACB's and are not too happy with the Hecla takeover price. That is understandable but the reality is Hecla likes what they saw and if they began there DD four months ago, it is safe to say the share price was around the CAN$3.20 level or US$2.20 level, so they really are NOT paying up too much. The reality is the share price began to fall after Klondex announced revised guidance in January and it fell further after they cancelled their investor day. So, even though Hecla appears to have paid a 70% premium, the share price was not at levels reflecting its true value and it was unduly being influenced by the shorts and the TSX index rebalance in combination with the lack of clear direction and communication which was likely due to the increased interest being shown by Hecla. So you have every right to be pissed off if your ACB is higher than the takeover price. Be pissed, get it all out.
The reality is that Hecla's CEO has been at the helm for 17 years and has made some incredibly astute acquisitions and he obviously feels this acquisition is a smart move for Hecla and its shareholders longer term even though Hecla share fell 13% to a 52 week low of US$3.35. Those same shares a year ago were $6 and I dare say, they will likely move higher over the coming year once they begin to realize on the true value of Fire Creek, Hollister and Midas. Don't forget, Klondex has assembled one of the best land packages in the northern Nevada rift that offers significant exploration upside. Klondex just could not have delivered on that opportunity for many years down the road. So yes, Hecla has made a game-changing acquisition for their shareholders who are still scratching their heads wondering what just happened, The analyst who cover Hecla were also trying to figure out the 70% premium and resulting share price decline but this is normal with large acquisitions involving share exchanges.
The bottom line: Fire Creek is a tremendous high-grade gold mine with over 1M oz of low cost gold and that asset alone is worth the US$462M acquisition cost. Hecla has the resources and skill to mine narrow vein deposits and will make a lot of money at Fire Creek. Klondex share price gets a 60% lift today and the potential for more upside when Hecla's share price recovers and once analyst figure out the value lift potential. If you are a Klondex shareholder, at least you are getting shares of Hecla at a 52 week low as opposed much higher levels and if they get back to $6, your Klondex equivalent price is CAN$5.50 to $6 which a far cry from the CAN$1.8 this past Friday when shareholders were calling for the CEO and Board to be fired.
Under the circumstances, this is a very good deal for Klondex shareholders in the short term and a tremendous deal for Hecla shareholders in the long-term. If you lost money, you still have some upside, if you made money you still have some more upside.
Read more at https://www.stockhouse.com/companies/bullboard?symbol=t.kdx&postid=27743358#sVtxwdY6jW0GhR1p.99