Yes indeed .. HGO in a presentation in April used the average transaction price of $2.78 per PJ 2P to give a value per ESG share on achieving 1,300 PJ 2P (845 PJ to ESG) of $2.70. Patersons and other brokers have all said over $2.00 on achieving reserves targets. Why indeed would HGO sell their ESG shares at $1.00 given the above .... UNLESS they were certain of getting the additional "bonus" payment for anything above $1.00 in a takeover .. unless they fully expect this to happen? Otherwise they could have waited a few more months and very likley had $2.00-$3.00 per share?????
I note in that same presentation that HGO talked about its value assuming the above metrics for ESG plus cash, Kanmantoo and other assets ... of $517m .. or $1.25 per share. Now if you had reason to expect that sort of cash value down the track the best thing to do with the $176m from Santos would be as you say to pay out the Convertable bonds at 32 cents per share to stop dilution .... and of course as paradigm and others have suggested the other thing to do would be to buy back your shares on market!! This may well happen but I assume they will wait to finalise a JV partner for kanmantoo first (so they know how much of their cash they will need to develop that mine) before starting a buyback.
Whad ya reckon?
H
HGO Price at posting:
23.5¢ Sentiment: LT Buy Disclosure: Held
