Why does a company, who says they are STRONGLY cash flow positive, who says they would make money even if gold fell $400, whose CEO stresses in every speach the undervaluation of the stock - sell 7.1 million shares of this undervalued stock??
What does Bailey think is between undervaluation and full valuation? I think it's a couple quarters of doing what you say you can do without seemingly avoidable mistakes - like failing to move homeowners until the last minute on a mine you've owned 13 years; like letting a handful of protesters almost bankrupt your company...and now selling stock at a 50% discount because you could not wait a few months.
You are right so far. With gold yesterday finally at new high's, that financing look's good. The bank's are in terrible shape right now, and we got a good deal for our company's future. I bought to 80% yesterday, the other 20% CDE. IMO, Mr Obama, and the FED will stay this path. At least until his health reform is passed.
Because they have been lying...Or you have to question what kind of security these smaller miners have over their processed gold and silver since almost none ever achieve what they promise.
I think a lot of disappointed people have very short memories here.
1. A few months ago, MFN would not have been able to issue stock at a prearranged price. They would have had to issue new stock with no price guarentees and be prepared to be savaged by their underwriters who would issue the stuff at a very deep discount (after they shorted the daylights out of it). This was a much better situation. Also, you can look at this glass as half empty or half full. If they would have done the issuance a month ago they would have easily gotten 20% less.
2. This really isn't something to overthink in my opinion. They raised funds to pay for the mill & do it without having to wreck their debt-to-equity levels which would have put them at the mercy of the banks in the future.
3. The junior sector is littered with undercapitalized companies that either hamstrung themselves into never achieving their real potential, or were forced into undervalued buyout offers.
The pricing wasn't nearly as bad as it could have been. I agree with warmcamp, a few months from now this really isn't going to an issue whereas a new mill and much higher recovery rates on the way will be.
Best of Luck...
If offering is announced at $10 then stock price must revisit it; it always happens this way. Also, stock was traded decisively higher than $10 for one day, yesterday only, and offering price was probably negotiated before that.
That makes sense. I hadnt thought about the production update.
I really think this news today has been overcooked in the stock price. Lets face it, the glass is atleast half full, MFN is erasing debt and investing in its future. And this is after a strong run up in the stock price from the $2s!!!! Not a very good reason to punish a stock in my opinion. I would have expected this have had a negligible to moderately positive impact instead.
No problem. By the way, I don't know why you decide it is not relevant, but here is my version. I think that Q3 production update that company should issue in the beginning of October, i.e. 3 weeks from now, will affect stock price much stronger than this offering news. In 3 weeks we will know if processing rates return to normal levels and the answer, in both positive and negative form, will obliterate stock offering impact if any of it could still linger at that point.
Regarding the 50% discount to the current stock price, I think there was some initial confusion as to how steep the discount was.
When I first saw the news article, I am pretty sure the stated offering price was something like $4.60. My heart sank as I was reading the article and was wondering whether to sell my shares or not.
Then, the article was updated to say that the offering price is $10.65.
So, in the 60 seconds or so this morning, I went from extremely negative to positive. In fact, I bought some more shares this morning for a trade.
10.65 Canadian dollars, so it was a 6% discount to previous close.
That comes out to about 10 U.S. dollars, and I believe that's about a 50% discount to the value of MFN at this point with the current POG and POS.
Also, when investment bankers get wind of a company looking to dilute shareholders for financing, they (esp. the underwriters) short the stock so they can get more shares in the deal. That definately happened last December, and probably put downward pressure on MFN shares these past few weeks.
I think we spent enough time with this stock to discount any presentation speech. Obviously, company considers $10 as good enough to close debt position by selling shares.
In regards to strong cash flow, it should appear at some point next year, but not now. It was known for some time that Q3 earnings/cash flow will be very weak, so $10, hopefully, defines bottom for stock price at this point. It should be better in few months ahead.