Just looking at the details of this transaction. Currently the book value per share based on the pro forma balance sheet attached to the announcement is $2,690,515/42,863,924 shares = 0.0627c per share prior to the transaction. After this transaction which looks hugely dilutive to existing shareholders the BVPS will be $14,734,630/440,863,924 = 0.0334c per share. This represents ~46% decrease in book value for existing shareholders. Note this doesn’t include shares that are issued for consulting and advisory costs so the actual decrease in book value will be higher.
Another way to look at it is that equity will be increasing by $12,044,115 as part of acquiring Stonewall however MRJ is ‘paying’ with 398,000,000 shares which when valued at current market price of 0.10c represents $39.8m. Doesn’t seem like great value to me.
All of this wouldn’t be a problem if you believe that the deal will be good long term for MRJ and they will become profitable. On a more positive note they have finally got some directors with solid mining experience including Dave Murray and Lloyd Birrell.
What does everyone else think?
MRJ Price at posting:
10.0¢ Sentiment: Sell Disclosure: Not Held
