Overall, I agree with you Loki. The dilution to current shareholders, is quite disappointing. I also feel the deal was set up a while ago. Particularly, surrounding DGO and their interest in NTM (a recent occurrence). DGO have done very well out of this deal, particularly when you factor in their 60m of options. Oh, and all the strong buying by NTM directors... I wonder if they have shown the same level of support for the company in prior years, compared to just the last 12 months...?
The merger tells you something about what LJ thinks is the problem with DCN's current ore resource/reserves.
This sentence sums things up very well. It also explains why DCN has offered such a high amount of the company 31.2% for, what in reality, is a company with no reserves.... and the majority of its resource, is simply not economic to truck anywhere. I view their current resource, as potentially, around 240k of higher grade, with if they only do infill drilling, perhaps 80-100k to be converted to reserves.
Basically,... DCN is desperate for reserves. NTMs ground could end up being great, but... that is years away from being proven. As you say, the company's share price is now def going to go nowhere, they have to now fund a large amount of drilling at the NTM deposits (coupled with the very high stripping at DCNs current pits, means they are likely going to tread water for years.
I also fail to understand why they are doing this deal now. Surely DCN would have been better to wait 3-6 months, increase their cash build etc, whilst watching NTM do more exploration with their own cash. They likely have around $3m as of today, so the cash injection is basically negligible at this stage. Surely there are better deposits that DCN could have picked up nearer to the plant than NTMs?
DCN has been talking up its very exciting portfolio of deposits and targets.... what about the U/G? I also get the impression that DCN is keen to undertake more consolidation... hmm... more dilution??
In summary, I view this as DCN paying close to $900 AUD per ounce of what will eventually become reserves (plus infill costs), to secure NTMs higher grade deposits. (100k reserves, market cap price $90m). Funnily enough, its close to the same price AMI just paid for Dargues project (which has a working plant and 5 years of reserves ($1000 AUD per ounce in reserves)).
Perhaps.... RED was looking at NTM as well..as their Darlot mine is barely profitable, but... I guess we will never know what has caused LJ to move so early...
I wonder how many posters today that are very positive on the deal, are holders of NTM. I think they got a very good offer... so I guess well done to them.
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