It's quiet in here... nobody wants to comment on a merger between MAE and SGNL? OK, let's try a more sensible subject then to fire the "debate": how much should SGNL pay. Let's start with a 40% premium on the 9 cents average SP from the last 6 months. It means 13 cents per share for a total offer of $62M for the company. Will this be a good offer?
On the first offer, in July 2018, ANX offered MAE shareholders 21 cents a share and the share count was about 100M at that time. It was a global offer of about $21M, all in shares, for a premium of 108% at that time. We know the story, MAE shares have been diluted by 400% since then so if we remove the dilution factor, it means that if the same offer would be done right now, it would be about 5 cents (the current SP). ANX offered at that time about $20 an ounce of gold for 1M oz with about 600K in M+I and 400K inferred. Gold was around $1200/oz. Both companies changed their management since the fist hostile bid.
Now, 3 years later, MAE bought the Nugget Pond gold circuit and is nearer to a production decision but did not increase the resource. Gold is about $600/oz more. Like I said, shareholders have been diluted to death. On SGNL’s side, the resource increased more than 2.5 times to 3M oz, they have a go ahead to develop Goldboro and management proved that they know what they are doing (now that the issues at Point-Rousse are fixed). I would say that MAE’s situation did not improve that much compare to SGNL so I would say that SGNL has an advantage in the next round of negotiation.
MAE’s management and shareholders must evaluate how much an ounce of gold in the ground is worth for SGNL to get the maximum value for Hammerdown and Orion which have about 1M ounces. Some people (you can look at https://munknee.com/how-to-value-a-junior-miners-gold-in-the-ground/ ) did some research about how we much assess the value of gold in the ground and the conclusion is that 20$/oz for Inferred, 30$ for M+I and 160$ for P&P (Proven and probable = gold reserve). So if we take right now the 520K in M+I and 460K Inferred, it means that $15.6M + $9.2M = $25M should be a fair valuation for MAE’S gold. It’s not far from the current market cap!
IMO MAE is not in the driver seat right now. After the FS is published, perhaps they will be able to get more if the resource in the reserve category is interesting. If we speculate based on the last PFS published, the P&P could be around 500K oz, meaning that the gold in the ground could be valued much more. But I do not think it would reach the $160/oz as the mine life is only 9 years and a major will not be interested if the deposit does not have A LOT more ounces. SGNL is the one that can afford paying a little extra for the ounces in the ground as Point-Rousse is already paid for, is near Hammerdown and is currently running with a competent trained work force, tailing facilities and all the permits in place. So, they might be willing to pay $40 to $60 an ounce in the ground IMO, meaning 10 to 13 cents a share. Their first offer will not be as high as 60$ an ounce though, they could start with 40$/oz for $40M or 10 cents a share.
So both the 40% premium and in-situ value method is giving about a maximum of 13 cents a share or about $60M for the company. Are you willing to accept that? If not what is your price? All in ca$h, all in shares, a mix of the 2?