Keep in mind... This is the biggest premium EVER paid for a large gold mining firm. Before that, state-owned Zijin Mining Group (China's biggest gold producer by market value) said it would spend as much as $1.6 billion a year on acquisitions. Last year, the company bought 17% of Australian gold miner Norton Gold Fields and a 60% stake in gold company Altynken.
And these are only the deals the government WANTS to make public.
The government also has kept a slew of investments in the gold markets private and secret. You see, few investors realize the government's China National Gold Group (CNGGC) makes little information public on its most sensitive purchases.
For example, CNGGC has many aliases, including its 40% stake in China Gold Intl. Resources and may have more than 300 secretive investment stakes in various gold mining companies around the globe. With a tremendous amount of digging in recent months, we've been able to locate the Chinese government's significant equity stakes in dozens of junior gold mining stocks.
reposting this from Gold Miner's Pulse blog:
Fair Market Valuation Summary - 2012-Sep-27
Projected fair market stock price for Great Basin Gold Ltd., based on the current NI 43-101 resource disclosures and using very conservative capital cost estimates as well as an extremely pessimistic discount percentage, is C$8.22. The actual closing stock price was C$0.08.
Even with conservative estimates and pessimistic assumptions, the projected fair market stock price for Great Basin Gold Ltd. was well above the current stock price when this blog was started.
Sweating bullets? You must be joking. This stock is down almost 98% from its high. If it goes up by 200% from here, it will still be down 95% from the high. The time when shorts had anything to fear is long past. Disclosure: I'm neither short nor long the stock, just watching, as it may provide an interesting entry here if it survives. The above is just a general comment.
I own a bunch of GBG, but anyone guessing more than 50 cents hasn't had much experience with the stock market. Even a price close to 50 cents isn't likely. Acquiring companies just don't pay that high a premium over the market price. GBG was trading at 8 cents for a reason. It might be cheap at 8 cents, but it's not undervalued by 5,000%.