If you want an audacious speculation, just imagine what would happen if Aber offered 1 of their shares for 10 of MPV plus $1 US cash as a sweetener.
That's a hefty price to pay, no?
There are roughly 54 million MPV shares outstanding -- fully diluted.
Your hypothetical offer works out to about 5.4 million Aber shares, worth $216-million (all dollars here are Canadian) on Friday, plus about $65-million in cash. That's a total of $281-million. Then, Aber would have to pay De Beers back for its share of the costs, which right now stand to be about $220-million, plus inflation and interest. So, that's something just north of $500-million in upfront costs.
What would Aber acquire? A 36-per-cent share of the Gahcho Kue diamonds.
According to the Gahcho Kue information sheet put out by De Beers, a mine would produce an average of 3.2 million carats over a 10-year life. That works out to $260-million in revenue annually as a rough guess, although De Beers suggests $245-million. Operating costs are stated at $56 per tonne. That's $112-million annually. That leaves roughly $145-million in annual pre-tax cash flow, of which a 36-per-cent share would be a bit more than $50-million. Over 10 years, that's the same $500-million that Aber would have paid upfront.
It's late at night and I could be missing something really stupid I suppose. If not, I'm sure Aber's shareholders can think of other uses for their Diavik dollars.
Regards,
WillP |
