As a regular reader of all that is CMM I have found myself getting swept away in the buzz of takeover chat that’s dominated the 2 blog sites over the past couple of weeks. I for one have come to realize that I’m in danger of not being able to see the forest from the trees. Real Economics, RE, March 1st note on “why I’m buying” helped bring me back down to earth again and focus back on why I bought into CMM in the first place. As suggested by a writer this week with all the take over chat many new and potentially short term investors may buy into our company. If a bid does not happen over the next 4 to 6 weeks that money can and likely will leave as quickly as it arrived. I would prefer that some of it stayed, all is dreaming, as I’m sure all of us relative long termers would.
I bought into CMM in October 2010 at $0.45 cents after some 3 months of DD. I took so long because I was trying to find the angle as to what kept the SP so incredibly low in relation to its peers. With so much gold in the ground and production having just commenced why was the company so undervalued? I eventually concluded that as so many earlier investors had had their fingers burned, including no doubt many institutional investors, due to unfulfilled promises, or at best very delayed, the SP was just in the hands of us retailers and the two Russsians. Clearly the lack of a skipper was also weighing down on the SP. We were a bit like a rudderless ship with a very valuable cargo on board but watchers were not at all sure were we were heading.
Well now we have a competent experienced skipper and we know where we’re going. He’s told us in the conference call. In addition the POG continues to rise as do the world’s leading stock markets. There was one particular part of the Conference call which brought music to my ears and that was when Daniel Major said he would start approaching institutional investors in April. One quarter of hard work, the results of that work, a more thorough understanding of the Company and its resources, and then off to market the company.
For those new to CMM bid or no bid this is a very serious and will be an enormously profitable company and investment for you. I believe that it will not take Mr Major very long to attract new and large investors. I have confidence he will deliver quarter by quarter. My time horizon was initially until the end of 2012, clearly reassessing all along the way. For me the Fundamentals have not changed if anything they have even got better. As a result, like our colleague RE, I have been buying more over the last week.
It’s been a most interesting and profitable journey so far. Welcome to all newcomers and join the ranks of the converted.
6 comments:
Something I thought of this morning, which is sort of obvious but I think has gone unsaid, is the following:
Just because something was being planned weeks ago for March 8 and April 12 this does not mean that they have to carry through with whatever it was. If circumstances have changed sufficiently (e.g., because of the recent share price run up), maybe the plans will be reevaluated and changed?
I guess we will find out soon enough.
Dave, I hope that the comments on this blog and other Internet forums and the blog poll here have had an impact on WTG's thinking, if in fact, their intent was to make a takeover bid based on a share exchange. While some seem to think that a 1 for 3 share exchange equates to a $1.50 share price offer, I'd value such an offer at about 33 cents per share, because I don't think that WTG is worth more than a dollar.
Ipanema, you may be right about some of the recent buyers quickly selling CMM shares if there is no takeover bid soon, but I believe that much of the selling this week is due to shareholders that are fearful of a successful takeover bid for WTG paper. Personally I can't see such a takeover bid succeeding (unless for an even 1:1 share exchange).
If there is no such bid forthcoming, then I can see many of the shares being sold by the disappointed flip traders being bought back by the relieved former CMM shareholders. It's not like the company is fully valued at the current 76-cent share price.
Personally I wouldn't mind a little bit of a pullback in the stock price if it is because we do not get an unwanted paper offer from WTG. The stock will appreciate on its own merits and the ultimate payoff will be much greater than what we will be offered prior to reaching our potential.
I am prepared for a price pullback
should the WTG's anticipated bid turns out to be a none event. In fact I am planning to ride on to $700million to $1billion valuation for CMM so a none event really does not bother me at all. My conviction is based on all I have learned in the past one year abt gold, gold prices, gold mining, money printing etc etc n above all
the true value of CMM n my trust in DM's leadership
Ipanema, glad to hear that my writing was useful to you and you were also adding. It was certainly cathartic for me to share my thought process.
While nothing would truly surprise me, I find it unlikely that something is NOT going to happen this coming week. My sense is something big IS about to happen.
I think we should remember we are dealing with multi-billionaires here from one of the fastest-growing, oil rich emerging markets. Finisky in fact through Intergeo and Polyus is actually directly partnered with THE richest man in all of Russia now, NJ Net's owner Prokohov. The thought that keeps coming to me is : Do these guys really need to penny pinch here? Or should they just secure the key asset to legitimize their growing "mid-tier."
I think it's unlikely the tiny blip up in market cap of CMM has achieved in anticipation would change their overall strategy. I am thinking however that since we have run up to .76, it might take off the table the lowball offer that values CMM at .90 and we might be looking at 1.00+ as the new lowest possible initial offer since .90 is really not a significant premium to .76 and .90 is guaranteed to be turned down by every retail shareholder that has any inkling of knowledge as to what their shares are fundamentally worth.
My guess is on or before March 8th this Tuesday something big will happen that will affect all CMM shareholders and make us the temporary center of the junior mining world. In most cases, this type of attention is bullish.
The big question is of course is exactly what is going to take place. The good news is we don't need to wait much longer to find out.
Cheers,
RE
With regards to PDAC, what is surprising (and interesting) is that Zaruma Resources is listed as a participant at PDAC. Normally, companies that are in survival mode are completely inactive as they attempt to conserve every single dollar.
Below is a summary of the Zaruma situation, which I originally posted on September 3, 2010. It also includes some of my thoughts about the situation.
Although I haven`t been following the developments closely, I don`t think the bank funding and the equity funding have been closed off as yet. I think the company might still be in a survival mode situation.
Of note, I did manage to take (literally) only a 30 second glance of the document that was presented to their shareholders for approval. I believe I saw Finskiy`s name added on there as a key equity financing backer, along with Scola of course.
Also of note, I think Zaruma is now trading at $.10 per share on the NEX exchange, but this is before the huge share dilution to Scola and friends kicks in.
Here is my previous summary of the Zaruma situation (represents only my interpretation, way back on September 3, 2010 - and again, I haven`t followed developments closely over the past 6 months):
``........ I will provide some fyi info on one of Scola`s other ventures (since there was an update today).
Scola, via his Gravity investment company, has stepped in to try to salvage a company called Zaruma. They are in serious financial difficulties. Zaruma has a near completed copper operation (in Mexico). It also has a nearby gold deposit with decent potential. Unfortunately, it has $38,000,000 in liabilities that are past due, with $27,000,000 of that amount being secured debt.
Scola stepped in this year (as an investor) and has provided them with $800,000 in convertible debt to help them survive near-term - can be converted to 16M shares plus 16M warrants. Zaruma has 118M shares outstanding.
Scola has a non-binding equity deal with them to provide $20M @ $.05 plus equivalent warrants at $.10 each. However, the deal will only go through with at least $20M of debt financing being arranged. A non-binding copper off-take debt deal was arranged in August for $30M, with a `major international bank`.
If the deal goes through Scola will own 78% of the company. If he exercises his warrants he will own 88%.
The bank gets a nice off-take deal though. They get 208 monthly tonnes of copper (459K lbs) for 48 months. Planned production for the operation is 600 monthly tonnes of copper cathodes (1,323K lbs).
At $3 copper per lb, this gives Scola/Zaruma $2.6M monthly gross revenue (there is also a price participation on top of this from the off-take lbs). They estimate it will cost $1.15 to produce a lb. That means monthly costs of $1.5M (plus corporate G&A and such). It looks like Scola can still make money, but he will need the copper price to remain high.
It clearly doesn`t have nearly the potential as Century Mining.
I think the Zaruma approach might be to use the copper cash flow to advance the gold part of the property. I think (with development and upgrade of the processing operation) they could fast track 25,000 gold ounces per year into production for 4 years (plus more with successful exploration). I think that would make their operation more attractive/profitable. I think the long-term gold prospects might be the big prize here.
Anyway, as of this moment, Zaruma is still is serious trouble. They will likely go under if the bank deal doesn`t close.
I wonder if Scola with do anything with the property if the deal closes and if he is able to make the operation work (profitably). Will he bundle it up with other base metal assets to grow it as base metal vehicle or will he bundle it with one of his other gold vehicles or will he keep it as a stand alone company and try to grow it organically. Perhaps his decision will depend on which metals perform the best, coupled with other discounted opportunities he may find in the future.``
``September 3, 2010 11:34 AM``
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