If it really is a premier Zn deposit then a major will buy the entire company at say a 40% premium, nothing like the 82x Hommel implies. But then when you look at how volatile MMG is being off 30% from its high and lots of cheap paper flooding the thin market is that a good risk?
Majors likely won't try to buy them out until after the feasibility is completed, as that will prove the economics of the project. That's what happened with the Skorpion mine, which was bought out about 7 years ago at about the same value as MMG's current market cap, even though zinc was much lower then and Skorpion had no silver or other metals. With the dearth of large zinc projects in the pipeline, I would be surprised if there aren't multiple takeover bids at much higher prices after the feasibility study's complete.
If you think a takeover of a premier, late stage zinc project can be completed at a 40% premium, take a look at the current bidding for bcMetals, who recently finished their feasibility study on their only 25%-owned smaller Red Chris copper project and has gone from a .60 stock with a takeover attempt at around $1.00 to $1.70 now with competitive bidding still ongoing (http://today.reuters.com/news/articleinvesting.aspx?type=mergersNews&storyID=2007-02-02T205704Z_01_N02240081_RTRIDST_0_BCMETALS-IMPERIAL.XML ).
With zinc well over 30% off its high, MMG has held up better than many other zinc juniors despite having millions of shares freed from lockup the past few months. Once the last of the PP profit takers is done, there is very little to prevent the stock from moving much higher. With shares in the stronger hands of institutions, with GTI advancing the world class zinc project through feasibility, with the high-grade silver being proven out, and trading at an extremely low valuation, MMG represents one of the best risk/reward investments in the market, IMO. |
