Hi Dickyboy, I would suggest the funds will be used to get at the ore high in silver content. The price of silver will continue to run alongside gold; therefore it makes a great deal of sense for management to agressively pursue higher silver content and bring it online ASAP. Those cashflows will then hopefully fund the diversification into copper or another tilt at another asset base.
500M shares is not a lot by any stretch, expansion into producing ore bodies they already own is not a risky strategy. Things are lining up well for PEM. Probably see some short term drift on the share price due to the RI; however consider that post allocation a share price of 50c, market cap of 265M, puts them on a PE < 4 on current workings and product price.
An expansion delivering 20KT of additional paying metal at current ZN PB AG ratio would deliver earnings supportive of a SP of $1 at a PE of 6. All very conservative for a company with a 10 year mine life.
The best catalyst to drive the SP higher is well targeted expansion of the existing ore base. The proceeds of the RI will bring this about in the most rapid fashion without having to hedge large portions of forward production to satisfy the banks.
PEM Price at posting:
46.5¢ Sentiment: LT Buy Disclosure: Held
