offer analysis

There is no point in getting angry over mgmt decisions, especially if there is money to be made as a result of their actions.

My analysis of the deal is as follows (250m shares):

+/-'s to the above:

+ full $20m for Zara exploration assets
+ the above includes no upside from Mogoraib North
+ upside from depreciating AUD
+ upside of a higher offer from SFECO or others
+ Trading in CHN should bear no correlation to the market during the offer period (hence minimal systemic risk)
- institutional ownership will be nil going forward (hence the 20% discount, but could be greater)
- mgmt credibility will take a large hit by accepting a low ball offer for a solid asset and hoarding the cash

Conclusion: Traders buying at levels of 30c and below are highly likely to make money over the next 6 months. LT investors, if any exist on HC, are better off parking their money elsewhere.

I'm not sure who are advising SFECO and CHN, but I believe both parties would be better off through a takeover of the listed asset (as highlighted by stateside):

Under a listed takeover, SFECO also acquires Mogoraib North. CHN shareholders get a clean exit at a better price (50c would do) and importantly we get our cash back.

The key issues are the tax leakage from an asset sale and the discount investors will place on the CHN cash. With the share price hitting 24.5c yesterday, the message must have made it up to mgmt.

I post on HC to have my ideas/thoughts vetted and critiqued so I can make better decisions...do your worst.