<How does one compare the probabilities in the two cases?.
Well, they will both benefit from higher metal prices. They're just priced differently: MFL has a US70m market cap (with in the money wts diluted in), and GNG, IMR and SUL are about US$5m. So I guess the question is could GNG, IMR or SUL come up with something equal to and superior to MFL for the difference? Might be a tough order, but I feel the ultra low caps for a only a few million in drilling might well create an expectation and eventually a reality that could happen. If they could do so, or approach those parameters, do the upside math. If not right away, they are project deep or have big districts, it shouldn't be a wipe out. Could you get that from MFL or BAY at four bucks? When MFL, BAY were priced at only two or even three bucks such a comparison might not have made sense. Now I say it may as the pricing structure of the markets is starting to get skewed towards the less developed plays if there is some quality there.
To Claude on failed drill plays: I'd say most of those were with the pricing expectations and higher market caps already built in. Pacific Rim comes to mind: ridiculous valuation that couldn't be met, and rightly ripped to shreads on these boards by CC and Liz in real time. Actually CC had such a spec a few years ago he played just right, even though it failed: NDT with a Peruvian prospect called Antana. I never got in, but I watched it, and was very impressed with how CC got out fairly intact. The reasons: although the drilling failed, the market cap and expectation was low, they had some reserve cash, and other projects. The fallout just wasn't that bad. You wrote the formula on that Claude, that's good junior portfolio management, and I think that approach still works. I do think the hurdles to be met on the higher cap juniors are going to get tougher however. |
