a) basically there is no reason for a consolidation. My guess: from a optical point of view a high share price is less attractive as a low share price. Today Intrepid is a penny stock. As of September it will be quoted (at least I hope so) above A$ 1 (0.13 - 0.07 = 0.06 x 20 = 1.20).
b) beeing less attractive probably Intrepid will fly definitively below the radar of a lot of (new) investors. At the moment I see no reason why somebody who is not historically connected to the company should buy Intrepid.
c) The cash back makes probably sense because basically you keep your share in the company but you get a part of the cash that is in the bank. Let's assume that sometimes in the future Intrepid/Kitumba will be sold for let's say 50m - then very probably you will get the same then without cash back. Makes probably not really a difference.
d) A substantially lower number of floating shares will probably dramatically reduce liquidity. I assume also that the SP might be manipulated easier then today. If somebody wants to push it down or to the for what reason ever.
e) It might be that some investors with smaller holdings will just write off their investment and will sell. Depends probably a little bit from your cost price and number of shares. Imagine you have bought BTR at A$ 1 and you have invested 50'000. Today you are left (after split) with 2500 shares worth A$ 3000 (after cash back and estimated). It might be that it makes no sense to keep the position - I do not how many funds are invested in Intrepid but it might very well be that they use some threshold and such mini positions will be sold.
f) having said e) somebody might be interested to accumulate more shares and to take control
g) Should you use the cash back to top up your investment. Well, the issue that I see: if you have a rather small number of shares top up your position means spend money. Most banks have some minimum brokerage fee. So probably it makes no sense to top up and maybe it makes also no sense to keep the position.
h) Let's assume you are holding a larger number of shares. Well, due to the fact that basically the share in the company remains the same it is difficult to find reasons to top up your position. Means use the cash to buy more shares. See also c). Spontanously I think that there are probably better opportunities around. If you think positive and you believe that Intrepid might recover substantially (e.g. higher CU price) then the time horizon is (my guess) something in the range of 5-10 years (I do not see reasons why the CU price should recover before 2020). Having said that I guess that there are other companies, explorers or producers that are more attractive.
i) If you are a "believer" and you want to stick to Intrepid and buy more share then you will reduce your cost price and increase your share in the company. However, I guess that a lot of long term holders need a multiple of the current SP to get back their investment. So if it was let's 10 times before this transaction than it might be 5 times current SP to see your money again. Well I do not want to be to much philosophical here but if really something should move the SP to such levels (e.g. CU price + 100%) then you can also go for the 10 times multibagger. With other words: I am not sure if it makes sense to top up your position - however - everybody has his own view and makes his own maths.
k) what might be the opportunity costs to not top up your position: the question here is: where is a possible upside. Exploration might be one. Well, we know that here is CU around target H. How much CU? We don't know. The results will be release end Q3. Do I expect some kind of mega surprise? Not really. Especially the footnote is interesting. If I remember correctly the CU is there but the question is if you can extract it. This health warning makes it in my view rather improbable the Target H might be a joker for Intrepid....but even when there is a deposit and they can extract it from the soil (hopefully a low cost) at the current CU price I do not expect an explosion in the SP. Will they find a Tier 1 deposit by coincidence? Well...let's be realistic. They have found it in the last 30 years and the current management has not really a profund knowledge with regards to exploration.
l) Could a possible upside come from another angle? Well, yes...they have still cash. It might be that they plan some kind of joint venture. E.g with an operating/producing mine with an interesting deposit that needs cash to increase profitability, expand production or whatever. In this case the situation would be similar as it was as BTR and Intrepid went togheter. BTR had Kitumba and Intrepid the cash. However, if I remeber correctly the fair value of the shares after going togheter has been stipulated to be at 35 cents (correct me if I am wrong) and it was then somewhere around 20 cents and we know where it is now. With other words: If this might be a possible scenario in your mind then it might be wise to preserve the cash and buy at a probably lower level (if you really want to).
m) I assume that Miller & Co are smart guys and want to make money. I do not assume that they have invested in IAU to make a few dollars. I assume that they need a multiple of the current SP to be happy. I also assume that they have plenty of time. They can wait and time works for them. Sooner or later they will take full control and then your are just a guest and completely dependant on what they want to do.
Conclusion: Unfortunately I do not have one. I have just the feeling that we need a lot of time and a lot of luck to see our money again.
IAU Price at posting:
12.5¢ Sentiment: None Disclosure: Held
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