Big deal, so the notes get converted at par and even assuming the amount outstanding is 234 million (trading now at 2/3 that and the company has normal course bid in and plenty of cash to execute it). But, I suppose you are going with the notion that advanced stage ten million plus ounces of low cost (sub-100 cash cost) gold have no value argument a la Great Basin?
The price of the shares at conversion will not much affect the total market cap of the company. Of course the risk to a stub play is that the stock is trading at some absurd price, as it is now, and the share of the new equity capitalization is diminished. I believe this company has plenty of resources and quivers left to counter that extreme outcome. Those are: 1. 96 million in unencumbered cash 2. 50% of TVX/NDY, while probably still not worth 180 million, has a reasonable proximity to that 3. an increasingly scarce (and large)low cost deposit that mining companies should covet, unless they plan on throwing in the towel. How many of these are out there? A handful, at most.
The best outcome is going to be an outright sale (or major JV cash infusion)of this company, and NDY makes the most sense. They operate in Greece and Turkey already, and would pick up one of the better projects in the world. TVX is not going be able to develop the Greek properties alone, as they are too small and constrained. The price (for everything)should be well in excess of the cash takeout of the notes (234) minus working cap (46) and current stock market cap (40), or 228 million. My number is 250 million for Greece (well under $25 an ounce, a bargain), and 150 million for the rest, or 400 million. Since all the other numbers are relatively static but the equity stub, I pencil nearly $6/share (400 takeout plus 46 working capital, minus 234 notes is 212/35.7 shares out. The reason Batiste is gone, is that the work out people are on board to carry this out. This company is for sale. |
