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TGS

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4.9¢ tiger resources limited

Without checking I think there will still be revenues coming...

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271

11/09/14

20:01

Post #: 13961788
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Originally posted by caredes ↑

The debt is for a few reasons:

- HMS most likely put up to a $20mill hole in revenue (but given it is going offline anyway this is a once off downgrade)
- they have to come up with $110million for the purchase. The unknown (if someone has more knowledge) they are owed $10mill in the JV, so it should only cost them another $100 mill
- they have up to another $110million for phase 2.

Assuming no revenue from HMS, with copper at current price, this should give them approx of $75million after tax, after costs and after 5% royalty (assuming nameplate). They do have cash but even with the $75mill raising to complete the acquisition and get to 50KTpa. in the next 12 months. With the raising and the extra debt I think they will have plenty but there are 3 variables:

1. if the deal gets Govt approval (I assume contracts are signed given a deposit has occurred) - if not they have plenty of cash to get the 50ktpa without further dilution
2. copper price (this is always a risk)
3. can they get to name plate and stay there without any hiccup

All in all the acquisition is a great step forward for the company but given the price drop below the share offer, the underwriters had to cover their position by selling.

I would be buying at market and can't see any reason (without a confirmation from DRC govt on the sale) for the price to go above 30 cents until 24th Sept.

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Without checking I think there will still be revenues coming from HMS, however at a lower rate.

As for the $10mil, the $110mil is the nett amount ($120mil less $10mil = $110mil)

TGS Price at posting: 29.0¢ Sentiment: Buy Disclosure: Held
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