HIGH-GRADE NI-CU-PT-PD-ZN-CR-AU-V-TI DISCOVERIES IN THE "RING OF FIRE"

NI 43-101 Update (September 2012): 11.1 Mt @ 1.68% Ni, 0.87% Cu, 0.89 gpt Pt and 3.09 gpt Pd and 0.18 gpt Au (Proven & Probable Reserves) / 8.9 Mt @ 1.10% Ni, 1.14% Cu, 1.16 gpt Pt and 3.49 gpt Pd and 0.30 gpt Au (Inferred Resource)

Free
Message: What is happening?

The sellers are not necessarily ignorant or brain dead. Suppose we thought the fully delineated resource might be worth say $1 billion to a developer, but not for ten years. Current headwinds would make that a reasonable speculation, neither runaway optimism or depression driven pessimism. Assuming the next financing will be highly dilutive (eg 80 million shares at $.50 per share with add-on dilutive warrants), we approach the end of 2009 with over 250 million shares fd. So you may need to envision $5 billion in 5 years to justify the risk, but there may be no meaningful buyer within 5 years. There is little evidence of buying competitions for assets that do not carry themselves, and even highly advanced resources are caught up in the "cash is king" problem - buyers want the resource for next to nothing, and the exploration company cannot raise the development money itself. There is no horizon, so valuation is a pure crap-shoot. Meanwhile, leverageable investments such as CLF, VALE and AA are market valued at a small percentage of replacement cost. Many would consider greener pastures short term, with lots of time to revisit NOT as an investment down the road. The control block certainly is not going to allow sp to get out of line with its dilution objectives, so the bias will remain to the downside. I agree with all your comments, but the market is telling us something and some set of factors , likely including design, is leaning heavily on the sp.

Share
New Message
Please login to post a reply