I think you are basically correct. In the case of BTO I believe they have other higher priority plans than taking over WAF and developing their nearby lower grade tenements that they already control. So for them WAF would not be their next project but something kept in the back pocket for future development, and in the meantime perhaps they may get access to other better projects.
My take away from the last Denver gold conference is that BTO has no need to over-pay for deposits at this point in time given their options.
If BTO were to attempt to take WAF once its in production then the total acquisition cost would be much higher, and again I can not see BTO making a move while they have other options. So the best that WAF can do is build the mine, hopefully prove up a 10 year LOM at 200k ounces pa with AISC under USD800/ounce. Assuming no further share dilution the share price could eventually head to around 70-80 cents at the current gold price.
Some long term investors that did not trade this share will be disappointed with the returns, and especially with the current share price, given the risks and time since they first invested. I hope they learn to trade the explorers/developers otherwise they will be perpetually disappointed with their returns.
I do not believe in the takeover manipulation story here - its the market conditions coupled with the country location that has resulted in WAF's low share price. Perhaps if they had a highly respected management team like DCN they could have got to the current stage with a much lower level of SOI, but we all knew they were not like that.
Having said this I would not be surprised to see them merge with another company at some stage. The Chairman has done this twice with two African based companies he managed - ADU and PIR. The merger basically saved ADU shareholders and held back EDV shareholders' returns. The PIR merger seems to have been made on reasonable terms to me.
It will be up to Richard Hyde to stay lots more years doing exploration in Africa to find further economic ore deposits if he wants to build up a significant mid tier gold miner. Perhaps he already wants out and was hoping for an over the top price takeover so that he could retire in Oz. WAF may in fact need somebody else with a different skill set to carry forward longer term expansion dreams. In time they should have a serious level of net cashflow that enable them to make deals buying ore deposits from juniors for development.
We could become rich in 2030-40 if WAF really takes off as gold miner with 1 million ounces of gold production p.a, but if that pipedream came to fruition I think most of us would have moved on log before.
loki (The devil made me buy WAF shares. Or I was listening to young Esh's ramping, which may be the same thing, for all I know.)
WAF Price at posting:
25.0¢ Sentiment: None Disclosure: Held
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