Comments on: Update On a Pair of Gold Miners http://enlightened-american.com/2009/09/21/update-on-a-pair-of-gold-miners One person's quest to make sense of a senseless American economy and society. Mon, 13 Feb 2012 17:26:16 +0000 hourly 1 http://wordpress.org/?v=3.0 By: The Enlightened American » Portfolio Review and Market Outlook http://enlightened-american.com/2009/09/21/update-on-a-pair-of-gold-miners/comment-page-1#comment-25498 The Enlightened American » Portfolio Review and Market Outlook Mon, 05 Oct 2009 08:18:08 +0000 http://enlightened-american.com/?p=401#comment-25498 [...] Update On a Pair of Gold Miners [...] [...] Update On a Pair of Gold Miners [...]

]]> By: Davy Bui http://enlightened-american.com/2009/09/21/update-on-a-pair-of-gold-miners/comment-page-1#comment-24872 Davy Bui Mon, 21 Sep 2009 23:38:33 +0000 http://enlightened-american.com/?p=401#comment-24872 Hi Greg, Thanks for the comment. I bought my first batch of MFN in Feb 2008 so you can assume that is the base for my share dilution figure. Back then, management asserted they had enough capital to open Dolores without having to take on more debt or issue equity. They had roughly 50M shares outstanding. Then the credit crisis hit along with setbacks and blockades in Mexico and the company needed more capital. They did what they had to do but the end result is that on a fully diluted basis, the company's shares outstanding is now 76M. As for Doody's takeover price, I don't subscribe to Doody's newsletter so I don't know what he has to say about them. My fair value range for MFN is $13 - $20, taking into account dilution. So I'm not too far off from Doody's number, even using different method. Being a value investor, I don't mind leaving a few bucks on the table in case my valuation is off a point or two, hence possibly looking to secure an exit. I'm not going to sell MFN for $10 per share but @ $12 a share, I'd be tempted. With various options, it may be possible to secure that $12 price in short order. Hi Greg,

Thanks for the comment. I bought my first batch of MFN in Feb 2008 so you can assume that is the base for my share dilution figure. Back then, management asserted they had enough capital to open Dolores without having to take on more debt or issue equity. They had roughly 50M shares outstanding.

Then the credit crisis hit along with setbacks and blockades in Mexico and the company needed more capital. They did what they had to do but the end result is that on a fully diluted basis, the company’s shares outstanding is now 76M.

As for Doody’s takeover price, I don’t subscribe to Doody’s newsletter so I don’t know what he has to say about them. My fair value range for MFN is $13 – $20, taking into account dilution. So I’m not too far off from Doody’s number, even using different method.

Being a value investor, I don’t mind leaving a few bucks on the table in case my valuation is off a point or two, hence possibly looking to secure an exit. I’m not going to sell MFN for $10 per share but @ $12 a share, I’d be tempted. With various options, it may be possible to secure that $12 price in short order.

]]> By: Greg http://enlightened-american.com/2009/09/21/update-on-a-pair-of-gold-miners/comment-page-1#comment-24871 Greg Mon, 21 Sep 2009 23:19:42 +0000 http://enlightened-american.com/?p=401#comment-24871 Not sure where you get the 50% dillution on MFN. I guess that depends on your starting point. Regardless, many of the new shares have 'strike prices' associated with them - whether they be from warrants, convertibles or employee stock options. For instance, these latest shares are going for C$10.65. According to your calcs which are focused on share count - that was a 10% dilution. John Doody believes MFN has a takeover price of US$ 14 - 15 right now based on other takeovers. If you assume that's the value if MFN continues to ramp successfully, and gets started on a mill which will signifiantly increase output - the 'dillution from a valuation perspective is on the order of 3%. Not sure where you get the 50% dillution on MFN. I guess that depends on your starting point. Regardless, many of the new shares have ‘strike prices’ associated with them – whether they be from warrants, convertibles or employee stock options. For instance, these latest shares are going for C$10.65. According to your calcs which are focused on share count – that was a 10% dilution. John Doody believes MFN has a takeover price of US$ 14 – 15 right now based on other takeovers. If you assume that’s the value if MFN continues to ramp successfully, and gets started on a mill which will signifiantly increase output – the ‘dillution from a valuation perspective is on the order of 3%.

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