This stock will drift lower in next few days causing Red Back Mining shareholders to vote no. Why would they align themselves with incompentent management. Kinross may have to sweeten deal, but the both shareholder votes will kill this deal anyway. I really do not know how TYE BURT will sell this deal to the Kinross shareholders. In his current comment he says
The deal will be immediately accretive on a net asset value basis, but that Wall Street may disagree.
"The Street, with its numbers, will see it as dilutive initially. We simply disagree on that, given the work we've had a chance to do," he said.
He said the deal will boost cash flow when Red Back's Mauritania mine expands over the next three years.
I GUESS 3 YEARS IS CONSIDERED THE NEW IMMEDIATE ACCRETIVE TO EARNINGS. AND A EXPANDING MINE DOESNT COST ANY MONEY EITHER. WHAT AN IDIOT. OF COURSE WALL STREET DISAGREES, HAS HE LOOKED AT THE SHARE PRICE SINCE HE MADE THE RBI INVESTMENT, ITS SETTING NEW 52 WEEK LOWS WITH GOLD AT 1180. I GUESS HE WILL ALSO LOSE HIS MERGER BONUS WHEN THE DEAL DIES. HE SHOULD REISGN.
"< Either much higher gold prices are coming or there is much more gold on Red Back's properties, or both. >"
I think "both".
Exploration has been very successful so far and there are many more acres to be explored.
I am against this deal because I think the "leverage" of the exploration success will be diluted if RBI assets were part of a larger Kinross whole.
(I am an RBI shareholder, not particularly excited to become a Kinross shareholder.)
Nothing particularly wrong with Kinross, but I feel RBI has better profit potential on its own, and not "diluted down" into the greater "Kinross whole".
"<if gold goes lower they will sell to KGC>"
If this were a cash deal (fixed price per share), yes, then I would tend to agree.
However, this is a share swap deal.
If the POG goes higher, both K and RBI assets gain value.
If it goes lower, the inverse is true.
Costs of production (per ounce) are roughly equivalent (at this point).
This deal is frankly not a particularly great one for RBI shareholders (I am one).
It is at the lower end of "acceptable" in my opinion.
I, personally, plan to vote NO, but I expect that many will not even bother to vote (which will automatically translate into a YES vote)
i agree with this on several points. I don't see how Kinross can pawn this on the shareholders. It's very definitely NO accretive at least for 3 more years.
No goddammed wonder the HUI and XAU can't breakout with idiot mergers like this we've seen from the likes of Yamana and GG (Glamis).
As for Red Back, I think most will be MORE than happy to back into almost 40% position of Kinross - now on its way to 3 million ozs.
Red Back may be a fine company with great assets, but for $7B I think Iamgold would have been a MUCH better purchase as that also gives them a great African foothold AND nice Canadian and South American assets to complement their own.
I am glad I sold my Kinross $32(34?) warrants that expire in the next year or so, I don't see a chance in hell of that barring $1650 gold ala Sinclair by Jan 2011.
I thought by comparison Newcrest did much better paying a similar amount for Lihir.
I thought the Aurelian deal was ok long term, they didn't sell the farm to buy it and it is a very lucrative long term gold play. But this doesn't make sense to me. I would think gold miners would want the most bang for their buck, not nabbing a high flyer on a tear and buying the whole kit and kaboodle at all time highs.
Personally I think they should have looked at GORO. They could have bought them for 10% the amount of money and gotten potentially 200,000 ozs of zero cost production high grade ore, which helps skew cost downwards. That's what I call accretive value.
So, you think that the RedBack shareholders will vote no?
That's what all the buzz was a year or so back when Kinross bought out Aurelian. "The shareholders will vote "NO!", etc., etc., etc.
For Kinross to announce this, they've probably already locked up more than 50% of the shares from the largest RedBack shareholders, the rest of the shares are just going for the ride.