Wednesday, February 23, 2011

Emails to Carib

Over the past several days I have received a number of emails addressed to me at  centurycarib@gmail.com asking for my opinion on topics discussed on the blog from people that are not able to post on the blog themselves.  This is to say that I'm sorry, but I don't have the time to respond to individual emails.  If you want to discuss CMM issues and request answers to your questions, become a member and post your comments.  All it takes is a request to become a member sent to me and a gmail address.  If you don't have a gmail address, I'll send you an invite to sign up for that as well.

10 comments:

production05 said...

We will have to wait and see what transpires over the next month or 2. It`s hard to assess what they are trying to do without having all of the info.

Nevertheless, I am starting to look at WTG a bit closer, in order to be educated in case something materializes.

On the surface, I am really having a difficult time justifying a market cap anywhere even remotely close to their $515 million cap. Don`t get me wrong, I`m sure it is a nice company and all, with good potential, but I can`t justify $515M at this stage of their advancement.

Century has 6 million ounces in the ground.

WTG has this:

``The mine is small, with 113 000 oz of proven and probable reserves as at September 1, but there is potential for expansion at the openpit deposit.``

``Other assets included the Nasedkino deposit is located in Eastern Siberia, 440 km northeast from the city of Chita, which contains indicated and inferred resources of 280 000 oz of gold.``

There doesn`t seem to be much info available on their other licenses, but I get the impression that these are their 2 most advanced assets, by far.

It looks like (ballpark) comparative ounces of 400K for WTG vs 6 million ounces for CMM. We`ll have to wait and see if WTG`s Ontario property has any 43-101 ounces to add to their total (I didn`t get the impression that those properties were that far advanced though).

This is where I`m struggling. I am unable to get my head around 400K ounces in the ground being equal to $515M market cap.

Glorieux said...

In terms of a cash deal, not saying it is not possible but even at $1, which I think most investors would refuse, you are talking about almost $500M, their whole market cap worth pretty much for WTG. Now, this company is backed by some big money and they may float this to them so not impossible but not a likely scenario.

To be honest, I really do not think we will see a deal with WTG taking us over. Really, what would they offer, 4CMM shares for 1 WTG share. That would double their share float, have an implied value to CMM of $1.10 but we know we can get that valuation all by ourselves in the next few months and I do not think many of us would want their paper so that deal would fail IMO. However, even if they do make that type of deal, the value of CMM would jump to a higher level, probably between $1.00 and the offer price. Those that do not have the stomach for this will sell in the market (with a nice 50% gain), the bigger investors will probably fight this and drive the valuation higher over time.

We do have some big shareholders, including a group out of Switzerland that holds 25M shares, group from Toronto/Sudbury that holds 15M shares and a group from Calgary that hold 10M shares. Peggy is still rumored to hold/control 25M shares and pretty sure she will not fight for a decent price. Add that to us retail investors who know the value of CMM and I think any unfair offer would be soundly defeated. Honestly, I think that most people are being overly nervous here. Any offer would be at a premium to market prices and even if we do not get our full value, we certainly will not get less than our current SP.

Glorieux

bigjohn37 said...

Production05, Glorieux, Carib & anyone else with legal expertise: What do you think of the implications of the fact that CMM's BoD is not fully constituted at this time (not in accordance with what is stated on the Company's website or maybe Bylaws)? What (if any) impact this would have on a takeover/merger offer (since the BoD would have to comment on the offer)? What about the potential conflict of interest of Mr Scola who serves on the B0D of both CMM & WTG? Or for that matter, what about the potential conflic of Mr Major, who is affiliated with Mr Scola on Ecometals? Lots to think about!

real_economics said...

The positive side of the current situation is that if there is a merger / takeover attempt, it tends to spotlight the fundamentals of both parties. CMM being grossly undervalued, I find it hard to believe any group or entity would be able to successfully "steal" the company without paying a significant premium.

If the offer were too low, it would be also be interesting if a 3rd party would take the opportuntiy to get involved. For example, a bidding war ensued for Crew Gold between Endeavour and Severstal in late 2010. Endeavour ultimately capitulated in this case, but not before Crew experienced some major appreciation. (traded from .10 to over .40 in a blink of an eye)

In any case, I see very little downside from here and am buying the dips prior to this event. We are a equity that with just decent execution should fundamentally should be worth 700 mil to 1 bil+ trading at a 250 mil market cap.

RE

Wingfong said...

With all the possitives coming out from co, getting to $1.00 in the next few months is a no brainer for those who know CMM. Further, our 6Moz is selling at $47.0/oz currently. It is said that for producers, the norm is $100-$150/oz. so even at the low end the sp could arguably be around $1.20.As such, anything below $1.50 should not be enticing to anyone who knows CMM.

real_economics said...

To me, this last move down on extremely low volume is fishy. Call me a conspiracy theorist but it's entirely possible if not probable IMO that the share price is currently being held and manipulated down in order to make the offer look more attractive and at the highest possible premium to current price. (Similarly to how shares certainly appeared to be held back until the private placements were closed.)

Since I feel this is probable, I'm happy to take advantage of the situation by buying into the sale.

In many of these cases the first offer is not necessarily the end-all either. I've seen situations like this where the offer is raised 3-4 times. However, the attention from having the offer acts as a catalyst to bring up the share price to it's fair value. High River Gold's increase while Severstal was aggressively trying to "steal it" for a song is an example that comes to mind.

RE

bigjohn37 said...

Hi Glorieux,
Judging by your well-thought out post, it is highly unlikely that WTG will be able to offer cash for CMM's shares. Without a fair cash offer, their takeover bid will likely fail. To that I'd say: AMEN!
But what about a MERGER scenario? Is that likely to fail too? With the large independent shareholdings you mentioned in your post, would not it be ironic if PK came out of the "woodwork" and decided to lead ther countercharge?

Glorieux said...

Hi BigJohn,

Have you seen the 44-101 from WTG this morning. This is basically an application to raise big money...so a cash offer now seems much more likely. When I think about WTG, I cannot see anything there except a vehicle for the rich Russian boys. They have priced it in the market so that no one really buys them but you have to wonder how their SP stays there.

My hunch is these rich, shrewd guys know exactly what they are doing. If they do a cash deal for CMM at $1, they probably get close to control with the shares they control and their friends. At a PP price of $4, that would add 125M shares to their float for 240M shares at $4 for a MC of 1B...with Century, they are probably almost a fair MC at that point.

Things will get interesting next week no doubt about it!

real_economics said...

My guess is that the agenda would be to first bring together White Tiger and Century and market it as an immediate "mid-tier" With Century's 110k or so of forward yearly production and White Tiger's nominal additional production, they could reach 130-150k or so which would be enough to be considered a Mid-Tier. This entity would ideally now be given an upside revaluation by the market for being geographically diversified and having a billionaire-backed ownership / board. It would also fully cleanse CMM of the Peggy era "discount" through re-marketing the assets under a new name.

This is similar to what Endeavour Financial tried to do with bringing together Etruscan and Crew before they ran out of cash, gave in and sold out to Severstal and just decided they would essentially just become Etruscan.

If they are successful with bringing together CMM and WTG, they can either attempt to consolidate more juniors to market the entity as a growing mid-tier on the path to becoming a major (1 mil+ in yearly production) or they might just choose to sell for a full mid-tier valuation to Polyus that has deep pockets.

The one thing with this likely agenda IMO is that without CMM, it can not work. CMM has both the assets and the immediate production to set off this chain of revaluations.

So it's in the power that be's best interests to not screw around too much and pay up and give us a good deal. There's no point in having a massive percentage of dissident shareholders while also alerting potential competitors who could try to steal or complicate the deal.

Of course,I have no inside info. I'm just speculating and could be completely wrong. This is just my guess based on my observation of how big money thinks.

RE

Wingfong said...

Talking abt alerting potential competitors who could try to complicate the deal, I would openly hope, in the event such an offer is made, a group which has the gumption to take on the deep-pocketed Polyus steps in. IMO this is one sure way some spices may be sprinkled onto the sp and the first contender will be persuaded to be less incline to take retailers as cooked meat. The end result is valuation will stand a better chance to be more realistic.