There is a lack of logical thought going on at the moment.
At an SP of 13 cents, and with the new shares on issue, the Market Cap of company will be about $45 million.
At an SP of 5 cents would translate to an MC of 17 Million dollars. That's about the cash on hand that they will have after placement, but let's say the debt and the cash cancel each other out for now.
So basically, the market would be placing a value of 17 Million on a mine with 25 million ounces of Silver in reserve, with 3 times that in the resource, with a pit developed and producing and a process plant that is near complete, with reports indicating that once oversize is eliminated, there will be increased production from the process plant.
17 million dollars placed on the cost of all the exploration, mine design and planning, development approvals; plant design and construction management; and no value placed on the resource itself or the exploration upside.
Selling at 5 cents would either be a sale under duress, or a someone who like to sell $100 for $50. For Magna to buy in quantity at that price would require a lot of people to cut their $100 dollar notes in half.
The reason the SP is down at 13 cents is because anything above that offers arbitrage to existing holders - ie. sell your entitlement now at a price above the placement and get a guaranteed buy in back at 13 cents. When it was up at 16 cents for a bit the the case was even more compelling.
Those that would be selling now at 13 cents are probably holders who can't afford to participate in the placement with new cash, but still want to inject cash into the CCU's coffers. It has been explained by fourdollars I think that Magna can't buy on market until the placement is done so all those buyers lined up at 13 cents are new buyers. So you would be diluting your holding but not handing more control to Magna.
CCU Price at posting:
13.0¢ Sentiment: Buy Disclosure: Held
