PGD has about 3.2 million ounces and counting - quite a lot of drilling is in the works - the value for Barrick on top of all this is considerable because of the location and potential of Pangea's properties - and much of the ore can be processed at Barrick's Bulyanhulu Mill which is designed with spare capacity for this kind of eventuality.
I agree, it would appear the asset is undervalued, inclusive of the cash on hand they are receiving 43.75US per oz. Barrick is gaining after CAPEX costs are re embursed ,a 20% interest net operating profit without lifting a finger on the Kwale project. I suspect you will be some money flowing into Tiomin shortly particularly if the mining permits are granted. The asset in Kenya amounts to 970Mil approx for the Kwale deposit alone, about the same on an asset base as the 3.2Mil oz gold delineated thus far. A good deal for Barrick indeed, as the TiO2 market is rising, and the gold market is stagnated. I guess one could look at Major Generals 292,000 oz Gold deposit, and wonder why they only received about 14US per oz cash, but in this market enviroment, I suspect it is all the market could bear. I am not condoning the offer, just trying to understand it.
Also there are the properties in Peru and Pangea's 20% net profits interest in the Tiomin titanium deposits in Kenya. This stock was over $8/share 4 years ago - a higher POG admittedly, pre Brex-X admittedly but at nothing like the development stage it is at now. I think PGD have been like lambs to the slaughter here.
Well, you have about 3 phases with these exploration stocks, the speculative phase, where valuations are pretty much thrown out the window, which was probably thrown out during that earlier run. The definition phase where the stock is probably fully discounted the speculation, and the reality phase, that is where cash meets talk. Apparently the cash phase is winning, and if the Gold market were stronger, that might not have been the case.
Maybe a higher offer will ensue.
Regards
George
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