I struggle to see what the purpose of this is...unless the management are setting the stage for a take over bid in which case they will need Trinity support. With DRG now owning 16% of Trinity and the management presumably owning some Trinity shares, they might actually have over 50% ownership of Trinity.
And lets face it, we got it for a steal. If you assume Trinity has nothing but a 25% interest in DRG's tenements and a 16% stake cost $30K, then DRG values their own tenements at $750K ($30K/0.16 x 4). Pretty silly given they paid $8Mill for them. Having said that, we are below cash backing to the market values them as worthless.
Remember we gave Trinity 25% when we paid $8Mill. That's a value of $2Mill. Now we could buy Trinity for $187,500 ($30K/.16) based on the current transaction.
Consider this transaction as a discounted buy back.
DRG Price at posting:
3.7¢ Sentiment: None Disclosure: Held
