MM, FALLING gold and silver price, hidden processing issues to...

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17/09/14

15:27

Post #: 13988489
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Originally posted by miningmad ↑

As a shareholder in a few stocks that have hit the wall, never to recover, I empathise with CCU holders.
To any CCU holders reading this SXG thread, if you were keen to resurrect the company by putting in more capital earlier this year, it may be worth considering the following.
Let's assume CCU's assets, about to be in SXG's ownership, are worth $60 million (equal to CCU's spend on physical plant and equipment in developing Wonawinta; ie not allowing any value for their other assets such as tenements, resources and reserves, which are considerable in their own right). CCU stated they required $8 mill to recapitalise to make the required improvements to turn Wonawinta to a profitable operation. This would have cost each shareholder another 2.4c per share, based on 330 million shares on issue ($8 mill/330 mill). Now that CCU is gone, is there logic in putting this 2.4c per CCU share into SXG? The assets are exactly the same, and SXG has two other gold projects funded to production. If you accept fair value for CCU of $60 million, and given that SXG will have 3 billion shares on issue once the debt deal with Canadian backer Trenchstone is finalised (this is fully diluted - allowing for all options and warrants), then the Wonawinta assets alone are worth 2c per SXG share ($60 mill /3 bill). You can buy the SXG shares for 1.2c, which also includes SXG's other assets. If this logic stacks up, it seems that investing in SXG is a significantly better option than the previous alternative of recapitalising CCU.
I know through experience that investors can become tied emotionally to a company and can miss an opportunity in the process. If I am missing something here, I would be pleased to be corrected.

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MM, FALLING gold and silver price, hidden processing issues to name but 2, GLTLHs.

SXG Price at posting: 1.1¢ Sentiment: None Disclosure: Not Held
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