Today Raytec Metal's provided an update stating that they will be seeking to spend their approx $25 in CASH on acquiring gold properties while they slow down on developing their Potash. Here is the NEWS:http://www.raytecmetals.com/news/index.php?&content_id=77
2009 Focus to Precious Metals:
While management of the Company remains pleased with the quality of the Company’s existing assets, it believes that in today’s market, a cash-rich company has increased opportunities to acquire interests in advanced, near-term, or producing precious metal projects. With its strong cash position, the Company is well positioned to take advantage of the current economic environment in the mining industry.
My take on this news release tells me that the following scenarios would make sense for Raytec. Its just my thoughts only..so please advise if you agree.
1-Raytec will spin out the potash and sulphur property into a new vehicle. The existing shareholders will own stock in the fertilizer vehicle.
2- Raytec will fund the new vehicle with 2-3 Million in Cash to get it up and running. I hear that Sulphur Solutions (of which Raytec owns a percentage) is close to be producing sulhpuric fertilizer and signing contracts with the Chinese. This should allow the spun out vehicle to unlock value for Ray shareholders and start CASH FLOWING.
3- Raytec will use the balance of approx $20Million to seek a near term producer for gold. I believe many deals have been presented and many juniors are seeking cash to develop their proejcts. I anticipate an announcement along these lines in the coming weeks. Companies to be targetted could include Robex Gold (V.RBX) which has a huge deposit in Mali but needs money to develop it. Another could be Rochester Resources (V.RCT) or even Monument Mining (V.MMY). All of these are near term producers who are seeking cash to be able to put mills in place. Of all of them it looks like Robex is the cheapest one in the market and most in need of cash to start producing. Would Raytec be interested in Robex's surface potential of 750K ounces of gold in Mali? Robex has been agressively developing their Mali assets and appear to be working with the local people in Mali( based on the latest NR on their website)
I believe that shareholders are pissed at current management. Current management now wants to make it look like they have not been sitting on a tropical island and collecting paycheques. Look for a flurry of activity before the next AGM is called. I think this stock will move now that MANGEMENT has a reason to do something. That reason is THAT IF THEY DONT ANYTHING THEY WILL NOT HAVE A JOB after the next agm in May or June.
Just MHOP. Raytec should finish strong and hopefully go higher to get close to the CASH break up value of $.30. This announcement by Raytec will also cause the share price of near term producers like V.RBX, V.RCT, V.MMY, T.CGC to edge up.