Coral Gold Resources CLH.v +.15 to C$.345
Posted: Friday Jun 24 7:47:18AM 2016
If they are going to be a royalty company, they need to be able to continue to raise capital once their initial stash of cash is gone. So they need to attract somebody with credibility. I found a little company, smaller than Coral, who decided to become an investment company in precious metals stocks. ELC.v is the symbol. They are undervalued to their cash but have done well because they invested in late 2015. Market cap around 5 million, book value closer to 8. But little trading volume and what happens if there is a slump in metals stocks.
But they have chosen just to buy stocks, not royalties. So they don't have income unless they sell one of their holdings for a profit. The royalty companies have some sort of revs if their royalties are producing. But, of course, if a mine is producing, it's more expensive to buy the royalty because of the competition. $15million cash sounds like a lot but it will be hard to find royalties to buy except for very small companies. That raises the risk. We'll see how it goes.
Posted: Thursday Jun 23 11:02:36AM 2016
I spoke to them today and they are thinking of transforming into a mining royalty company. Will go out and purchase NSR's and what not. They have some leads on adding appropriate board members who could help them in that transformation. All very tentative at this stage.
Posted: Thursday Jun 23 10:25:44AM 2016
Cash exceeding market cap puts a floor under the share price and should lead to some profits on the stock BUT the deal has to close AND Coral has to do something productive with the cash besides paying insiders salaries. No mention of what they intend to do with the cash but long term you have to believe that Barrick intends to put the property into production otherwise why spend $15 million cash. So there should be a decent NSR because Barrick isn't going to build a small gold mine. It's big or nothing.
I don't intend to wait around for Barrick to build the mine. Just expecting that the market will respect the cash Coral will have and hopefully Coral finds something good to do with the cash.
Posted: Wednesday Jun 22 9:31:14AM 2016
Thanks for this Bob. I took the following parameters:
47,825,336 shares outstanding
4,150,000 shares to be returned by Barrick
8,649,500 warrants at average exercise price of $0.12
3,170,000 options at average exercise price of $0.28
Current assets of about $400k.
Gives an EV/share of $0.40, well above the current market of $0.32. Places no value on NSR, other properties? (don't know what else they have).
I remember Wheaton River Minerals as an empty mining shell with a whack of cash in the late 1990's. It turned into a mining power house, and a multi-bagger for anyone who held it. (Not me.)
Posted: Tuesday Jun 21 12:56:37PM 2016
The Cash Consideration alone, excluding the value of the NSR, exceeds Coral's basic market capitalization based on the closing share price as of June 20, 2016 on the TSX Venture Exchange by approximately 116%. Based on the Company's current number of basic common shares outstanding, adjusted for the Share Reduction, the Cash Consideration alone, excluding the value of the NSR, on a per share basis is equal to approximately Cdn $0.46, as compared to the closing price of Coral's common shares on June 20, 2016 on the TSX Venture Exchange of Cdn $0.195.