"Ultimately EQX given their strong cash position should be able to get this into production without Exxaro. We are not backed into a corner and as such if a deal was to be done it would be based on the economics of the project."
That's definitely the major point as far as discussing whether any 'low ball' bid from Exxaro has a chance of getting up.
EQX cut the start up production rate to reduce CAPEX costs, and there's $50-$55m in the bank. Blackrock and M&G are still on board, and the top 20 holders own 80% of the company (a lot would be underwater at the moment, and still would be @ a 70c bid for example). Exxaro lobbing a bid @ 70c just isn't going to cut it because the option is well and truly there for the company to get to production by itself. EQX won't be forced into making a deal with Exxaro at a low ball offer, because EQX has other options available. Any deal would have to be better for shareholders than going into production.
From a corporate point of view, EQX is in a strong bargaining position. If there was no money in the bank, no major shareholders, and massive amounts of CAPEX was needed for infrastructure, the story would be different.
EQX Price at posting:
49.0¢ Sentiment: Buy Disclosure: Held
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