Hi Selma,
To give a realistic prediction, there are many unknowns so my figure is not even what I would call scientifically accurate or even 'close ball park' so I would have to attach a +/- 20% to the answer.
Firstly, I started off with my own figure, the absolute lowest I would probably accept right now, it's obviously a lot higher than the current market price because of great potential and high expectations which just haven't been factored in yet.
Then I thought about what a major may encounter/discover whilst working through their due diligence etc. and what conclusions they may reach regarding a current valuation.
How keen would each major be to get their hands on us before their opposition does etc?
Then I had a look at various other relevant factors and thought about possible announcements and more ball park figures etc. on top of the current situation as we know it.
I've considered what we've already found i.e. alluvials and kimbos, what we can reasonably expect to find in the not too distant future including alluvials and economic kimbo(s) and also some guesstimates of more distant possibilities such as more alluvials and finding the next world record stone and more economic kimbos down the track etc.
Obviously there are lots of unknowns regarding operating costs, weather, political stability, global high quality diamond supply, global economy, our share of future net revenues, possible adjustments to the Terms with Endiama, director sentiment, shareholder sentiment, suitor sentiment and many other factors.
To make the maths easier, I've also assumed that all options would be converted following the announcement of a possible takeover etc. so that we take all the resulting dilution into account.
Then, I've tried to put a today value on that rosy looking future.
I ended up actually calculating two valuations, a- higher optimistic one and also a lower pessimistic one and then took the average.
I've then looked at who the suitors may be and chosen what I think could be one of the most likely candidates, and then thought about what such a major would put on the table as their opening offer, then I've guessed how subsequent negotiations may transpire regarding boosting that opening offer etc. etc.
Finally, I would just like to add that there would be far more scientific methodology that someone in this line of business would use so I won't show my actual calculations because they would be like an open invitation for many negative people to pick them to pieces and argue with my results, so I will just give you my answer as follows...
For every LOM share, including converted LOMOBs and LOMOAs, my calculations showed that AUD$6.25 would be an acceptable offer so after allowing for my +/- 20%, I would suggest that a company such as Anglo American would need to start with an opening offer around that figure but with an absolute minimum starting point above $5.00 or else it's not even worth discussing, and then we would hope to negotiate to reach somewhere between $6.25 and $7.50 or above, but obviously as time passes, and especially with excellent announcements regarding anticipated discoveries etc., that figure may rise, based on actual results and announcements, yet to be reported.
Afterthought... If Anglo, or any suitor for that matter wished to issue some scrip instead of all cash, we would need to look at that very closely (Anglo, for example are currently planning massive changes regarding their Iron Ore and Coal operations etc. and their credit rating has sunk significantly but they are certainly keen to expand their diamond investments, possibly through their De Beers interest) and what we have could be just what all those majors need.
So following on from your question, Madame Bouvier, would I be prepared to accept $5 today, right now ($6.25 - 20%) the answer is, 'unlikely but I'll let you know tomorrow' and I would probably come to the conclusion that somewhere between $6.25 and $7.50 would be accepted by enough shareholders to make it all happen.
Some long termers may well put a higher valuation than my answer, and some short term desperates would almost certainly put a much lower figure, for instance, some sold today for less than 40 cents, can you believe that? The mind boggles...
especially when we may well find a bucketful one month soon, and/or an economic kimbo or even just a few more big stones near where that beautiful 404 carat 'Tip of the Iceberg' was, each possibility on it's own is potentially worth far more than our current Mkt. Cap.
So, final word, I expect that Anglo American etc. may well have to offer in excess of $6.25 to stand a chance of taking us out in the short term.
Would they be prepared to offer that right now?
Maybe, maybe not, they may wish to restructure their global empire first, but as mentioned above, the price could easily rise as time goes by.
So Madame Bouvier, I think some people looking at your question may come up with a higher figure, if so, perhaps they day dream even more than I do, but that's OK, we are allowed to dream, after all, dreams do sometimes come true.
I've tried to be realistic, tending to lean towards what I hope will turn out to be a fairly conservative figure, so right now, let's settle on $6 minimum but hopefully enough resistance to take the final settlement to between $6.25 and $7.50 or above.
Wouldn't it be great if there were to be three or 4 majors desperate to take us, that would be fun to watch.
Sorry you've all copped me in a verbal diaretic mood again, I had an hour to kill and typing is better than twiddling thumbs...
None of the above is intended as investment advice so please DYOR
and Best Wishes to all holders.
As mentioned earlier Madame Bouvier, that was a great question, it will be interesting to read any other answers.
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