i had a starter position in primero warrants in a couple of different accounts and was waiting for the merger with Northgate to go through in September. In the interim i learned more about primero.
as of this morning, the merger has been called off. primero stock took a fairly predictable dive, as did the warrants!
but primero was looking good to me on its own. 88 mm shares, which is good becuae it is under 100 mm and the company is already a substantial gold and sivler producer down in mexico and has good cash flow. they had 63 million in cash prior to the breakup and the breakup meant northgate had to write them a check for another 25 million. coicincidentally, that works out to a buck a share in cash, or thereabouts. $88 million, 88 mm shs.
i also liked that the mexico property, which has real size, is turning out to be richer in gold than was indicated in the first round of reserve numbers. that is very very good for primero, especially since primero has one of those silver wheaton financing deals that means it has to "give away" a lot of its silver at below market prices, just as with a hedge. on the gold, there is no hedge, no contingency, so they can go for the open market price on all of it
so today, instead of dumping or holding, i averaged down, and i now own a lot more P-wt.to than i did going into the week! I had been paying 80 cents or so. now with today's sell-off, i got some of my new ones for as little as 48 cents. my new average is u.s. 62 cents.
so still under water but averaged down.
these are way out of the money right now. the stock is c3.47 and each warrant is the right to buy a share until mid 2015 at c$8.00.
but here's another factor to consider. primero is a company that has yet to even crank up the promotion machine. first off, it had a different stupid name mala noche. then soon after it changed its name to the snappier Primero, it annoucned the merger deal, which put a damper on freelance promotion of primero on its own. so i figure management is going to come out swinging starting this fall, and that this is an emerging gold-silver producer that is goig to be much much better known by next spring that it is today!
primero just listed on the new york stock exchange. so now they are dual listed toronto and new york. |
