RE:RE:RE:RE:this deal is not insane
Personally i have mixed feelings on the private placement. The worst thing is the timiing was not good as the shareprice was surging very nicely ahead of the news release which then sent it down to aprox. the price of the private placement shares. This deal would have been worked out over the last weeks and months when the shareprice was in the low $1 range so it must have seemed like a good idea to management at the time. At least they did not do the deal at the low $1 range.
Being conservative i like the idea of having another $25 million in cash for many reasons. Firstly as others have said it is a good security against the price of gold dropping. Just because gold has been surging lately does not mean it can not drop again. When posters say that we have given up 13% of our company they have to realize that while we have dilluted the shares we also have $25 million more in cash that can be used to develop more production in the future.
We can now pay off our loan with the existing cash and have aprox. $25 to $30 million left in cash at this point. That should be increasing by aprox. $3 million per month if gold stays at these prices. At the end of the year we should have over $60 million in cash and no debt.
With this private placement we not only have security against lower gold prices we also have cash and income which will allow this company to grow a lot faster than waiting to slowly make the money. Without this type of deal TMM will be stuck at being a 120 000 ounce producer for many years while waiting for cash flow to build the company.
TMM has many other properties with good potential that have not had much serious exploration because of lack of funds. . If i was management i would start a serious drill program as soon as possible with this money. Imagine how much drilling we can do with $25 million not to mention the $3 millionn per month that is also pouring in.
If they do a major exploration program with this money and discover a lot of gold and silver you can bet that the market cap. of TMM will go up a lot more than $25 million.
While exsisting shareholders dont like the dillution especially as it has knocked the shareprice down we also have to look at how much good this money can and will do for TMM in so many ways.
The market hates uncertainty and this private placement has many wondering if this company is in trouble like so many other junior miners. Having been a shareholder of TMM on and off for years they are one of the best managed juniors i have followed who always deliver on what they promise and have run a tight ship with little debt and increasing production at low cost. Lets not forget that management also owns a lot of shares and have been buying a lot more recently.
While this dillution hurts right now i am sure that in time it will be proven to have been a good move by management and will reward patient shareholders many times over in the months and years to come.