A few thoughts, Koan, all FWIW and IMHO.
<<< so why not try and do a financing at higher prices.>>>
The reason is that PPs are a natural conflict of interest. With the Barr group, they use them to maximize profits for insiders rather than corporate treasuries. PFN was a classic case and their last PP was obscenely bloated in size at a miniscule price.... specially with Amplatts picking up the exploration tab. However, Barr is not unique in this. Check other stocks. Some Techies on CDNX like RRL etc were incredible deals for brokers and insiders with PP's not announced as closed until the stock was 5 or 10 times cost to placees.
To understand why this is not such a bad situation for ITF shareholders, consider the Barr organization. Besides PFN, the two other active entities now are CVV and ITF. PFN largely gave away the ground near Sudbury. Their actions indicated only modest faith in it. Roughly speaking (I've forgotten all details) Amplatts paid about $300,000 cash to PFN and after $4 million is spent on exploration, can acquire 65% of the properties. Once the $4 million is spent, Amplatts also becomes the operator. I'm sure the association with Amplatts initially looked good for marketing PFN stock. However, if exploration succeeded as it apparently has, the deal looks rather sad.
Comparing this property to PDL is appropriate. PFN make the comparison regularly. However, on reflection, it also indicates why the $10 per share some expect for PFN is highly unlikely. PDL would have to approach $25 - $30 before PFN would rate $10 ...assuming PFN finds something comparable to PDL in tonnage and grade. These are ballpark figures but the reasoning isn't.
Then there's CVV. That is a rollback of the former ICA. CVV was originally touted as an internet incubator. Far more money was invested in newgurus.com than RV for a smaller minority portion. The drive behind newgurus is Chris Bunka and Sudhir Khanna - both newsletter writers on stocks and mining. That said something about how Barr saw the two opportunities 6 months and a year ago. However, as Sudbury area started to look good, Barr's group realized there was still good ground available and grabbed it. Some went to CVV but I suspect with misgivings. It was a corporate vehicle but you have to ask how appropriate. Consequently, my hunch is any ground held by CVV will be joint-ventured with others. That would be in keeping with their modus operandi for CVV as a holding company of internet and some PFN stock.
The pure mining entity (and that's important) in the stable excepting PFN, was ITF. I suspect they didn't like the unwieldy share structure of ITF but timing was inappropriate for a rollback similar to ICA-CVV. So they've gone with ITF as is and are now hot on the PGM exploration trail in Sudbury and Alaska. There have been several announcements of property acquisitions.
In Sudbury, ITF has several blocks. One in particular is very interesting. Work has been quietly underway. It was sought by a major but their offer was refused. Contrary to the PFN style, ITF will be going it alone. Checking the placees, you'll note they are mostly the same crowd as with PFN. My hunch is that on close, a few placees will have changed but that's not relevant now. Point is that ITF now has great potential, 100% ownership of properties, good financing, and is about ready to roll.
You'll know things are underway when this placement is announced as closed. It shouldn't be very long although it usually is left to the last moment with this outfit... and many others similar to it.
Annoying? You betcha!! A setup? You betcha!! On reflection though, you'll note that despite the bloated PP for PFN, shareholders still did very well - about 1000 percent from bottom to top. Not too bad and the ingredients are there for something similar from ITF. It will be interesting!!
Bob |
