Hey guys, I’m curious of what others think regarding the VMS current JV at Thor.
Full Disclosure I hold both VMS and CHN and bought into VMS because of the CHN JV and possibly the tin mine being developed.
My thinking is below, and Id love to hear from you guys who have been investing in the Spec side of the market for a lot longer and also a lot smarter than me when it involves M and A if CHN find the next Julimar here as AD believes it may be.
With only another $2.5M to spend after the current drill program, we will own 70% of what possibly could be the next Julimar.
With VMS at a current MC of only $51M at todays SP, I can not see the CHN team wanting anyone else involved in the project, even if it was only half of what Gonnie is.
My thoughts are, let’s say the market improves after this FY sell off, and VMS’s MC goes to $75M, if CHN move on a buy out of VMS at let’s say a premium of around 25%, (which IMHO VMS shareholders will jump at due to many disgruntled holders, not happy with the current BOD there) which will mean $100M buy out of VMS, we would then maybe, and a big maybe, on sell the largest undeveloped tin project in the world at Mt Lindsay as well as some smaller fairly under explored assets in WA, which should cash us back up to at least $50M, even though I believe $80M could be realised on the sales quite easily in the right market.
IMHO, we will then own what may be another Julimar for $20M, does this make sense at all, or am I barking up the wrong tree here.
I do understand that of these 3 Assays we are waiting on, all come back like the initial drilling at Gonnie, the VMS price will rise considerably so may cost us a bit more than the $100M, but the way the VMS board has conducted themselves in the past, SH’s have no faith that they are able to get the project off the ground in a reasonable amount of time, as most believe they are a lifestyle company and do not have enough expertise on the ground there. I also believe that by years end VMS will require another CR, which will not bode well with current SH’s. And with only 30% ownership of Thor, in what could be a bigger asset than their undeveloped tin mine, I can not see SH’s holding on waiting for the BOD to make it into a devolved tin mine.
Or do you believe that CHN will just purchase the last 30% of Thor, from VMS ? If this was to happen, I think VMS SH’s will run for the hills.
I also believe the market will not recover well this year, after the FY sell off, and we are up for more doom and gloom in the Financial markets until late next year.
I look forward to hearing others thoughts on the subject.
Cheers
GLTAH
DYOR.
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