Hey Wassa,
firstly, I very much appreciate your reply and want for discussion, as the reality is being able to talk on such topics in the real world, is.... basically non-existent for me, so cheers.
Second, whilst it can irk me at times
, having different opinions makes HC what it is. The likes of twitter has some huge personalities, but... for some reason, little room for discussion like these threads (I guess they have gone too far up the food chain).
Great question about whether MGV holders will actually look at the rationale I have raised. I have a small holding, and as such I do, but.... so far we know nothing of what other holders really think. Particularly the large holders that have been on the register for a few years and basically seen the boom share price move, and since then.... it's all been downhill. For the major holders, who most likely do have much longer term investment thesis than retail holders, I actually think there is a chance that they will jump at this opportunity, if they view what Wayne B. at WGX has been doing as a real and substantial method for changing WGX into something it has never been, a profitable mid tier miner.
As for the position of weakness, I mostly agree with you, but.... WB knew what he was taking by the horns when he became MD. The company is asset rich, more so than the likes of RMS or SLR, yet.... it trades at more than 1/2 the E/V. Should he just sit and wait... and not have made the move? There is a valid point to that, in just 6 weeks, WGX will be the only mid tier producer (GOR again... is questionable due to its production profile) to be unhedged. SLR and RMS will catch up eventually, RED is heavily hedged (terrible outcome). WGX should have a real niche position for the investment community, it is going to have big moves up and down, because, its high cost, lowish margin. To date, the only real clue as to why he moved on MGV is what he has said publicly, it's logical (hard to disagree if the MRE matches reality), capex light when... no gold plants are being built in W.A (I think that is right, crazy really, though the likes of CMM will soon get a move on). AUC sits and dithers tweaking numbers and hoping someone takes them over etc. There is also the logic that WGX is potentially wanting base load open pit ore, particularly higher grade open pit ore, to mix into their plants, again, oxide the biggest selling point.
MGVs ore will hopefully enable WGX to improve margins and gain efficiencies of scale with the 40-50k extra ounces. It will arguably produce SLR & RMS (peers) without any real alterations to its plants (that we know of). For a bolt on acquisition it just makes sense to me. All the more so, when... MGVs share price and valuation has for at least 3 1/2 years, stayed elevated (yes the MRE has increased, but... not from ounces that are going to be highly profitable), whilst the average grade has decreased substantially, though not linear.
2019 MRE - 441k grading 2.85g/t
2021 MRE - 659k grading 3.2g/t
2023 MRE - 927 grading 2.3g/t.
Here is MGVs scorecard for 2020
Perhaps the EVN J/V has helped keep MGV levitating?
But.... pure speculation, EVN is going to pull out soon. They have spent perhaps $15m and come up with basically nothing. I def do not see EVN being interested in MGV corporate wise, just makes no sense to me. MGV is only even going to be satellite feed for either RMS/WGX or GCY. The upside is almost non-existent because, ironically, their high valuation means.... nowhere to go but down. MGV is going to be sitting on $8m in cash by June 30, which means major shareholders are already thinking about whether they will want to support the next capital raising, plus, whether they will want to take on the risk of developing MGV as a stand alone project, which will require MGV holders to raise north of $50m (at a minimum).
You last point is a fair one. MGVs open pits are likely the quickest to access compared to other deposits, like MEKs, or GBRs. Plus, on paper, they should be the most profitable ounces. Producers acquiring feed for existing plants makes a lot of sense. I don't think WGX is desperate, but I do concede they are in more need than say RMS. I guess to throw it back, what acquisition do you think WGX should be making? Or they should simply wait for their hedges to run out, build up their cash to $200m, then move on MGV? Lot's of other options too.
@eastwest101 - Good post. Particularly pertinent regarding funding. The exploration companies are raising at quite large discounts and funding for projects is drying up indeed. It will be interesting to see if my thoughts on WGX having a few good quarters ahead, will enable the share price to recover and MGV holders see an actual premium.
@Joelstar - no arguments from me. MGVs ore is trading at a huge premium, all the more so when you include only the ore in the PFS.
I guess MGV board are sitting on their hands are hoping that another bidder appears.....
(20min delay)