I’m not an industry insider but I have enough invested in MYG to...

I’m not an industry insider but I have enough invested in MYG to take a more active interest than my other penny stocks.  

My comments on a Chinese backed takeover is pure speculation. At the LBMA Bullion Market Forum in Singapore on the 25th June 2014, Zhang Bing Nan of the China Gold Association delivered a presentation on the dynamics of gold in China. In that presentation you will find some indicators that the Chinese government is heavily backing a gold derivatives market.

“China is speeding up the legislative process of the gold market, actively developing the gold derivatives quoted in RMB, enriching variety of transactions, steadily expanding the openness of markets, further improving the gold market system, expanding the breadth and depth of the gold market and promoting the healthy, sustained and rapid development of Chinese gold market” (Slide 2, page 2 http://www.lbma.org.uk/assets/events/Singapore F/LBMABMF2014_S6_02Zhang_en.pdf)

In order to provide sufficient confidence in the derivatives market, China needs a fair amount of physical gold in the vaults for a few publicity photos. It doesn’t hurt to have sufficient security to finally float the RMB currency either.

Any discussion around takeover and investment is of course market sensitive information but there is a qualification process that must occur before any announcement. If I call up MYG on Monday and offer them $2M I don’t think it is worthy of reporting to the market. If somebody puts in a $50M offer then I think there’s a few weeks of qualification, checking references and ensuring the certificate of currency hasn’t expired before any announcement needs to be made.

The Directors have to make a call on what they think will provide us with a reasonable return. What value would the market place on MYG if they secured funding? How much more attractive is a takeover once ore is being processed? If I was an investment bank I might consider buying some stock in MYG (say 25%), provide them funding, earn some interest on the debt repayments, get the ore moving, look for possible takeover parties, back a takeover,  recoup all my monies + interest + profit on shares. Makes sense right? But its sure tough to find an investment bank wanting to sink the best part of $100M upfront.

I don’t know of any takeover approaches from any organisation but I am hopeful MYG can secure some funding soon.