I am not at all suprised that the stock is moving up - actually I thought that it would be closer to $2 by now.

 

Obvioulsy the big issue is that of the need to raise some funds for the upcomng winter program, and it looks as though Ben and co are holding off till the share price is higher. Obvioulsy management believes that the assays will be good since if they were unsure of the assays I am sure they would have already announced an offering.

 

Also of importance I noticed that Ben Aisnworth and Warren Stayner were both exercising options at $1.20 - what does that tell us? In addition to providing the company with a bit of working capital, it tells us that they wont be financing at lower levels than $1.20 and that they feel buying stock at $1.20 is a bargain. I noticed that Ben Ainsworth has 115,000 common shares and  225,000 options (not sure of the strike price) and these are post consolidation numbers. It would appear that Stayner has a similar amount.

 

Revisiting the arb that has formed between FIS and AMW, again we have to consider that FIS has very nearly 10 times more shares that AMW thus every 1 cent rise in the FIS share prices should correspond to a 10 cent rise in the AMW price - which has not been the case. Analyzing this a little deeper, the market realized that AMW will have to issue some shares to pay for the upcomning winter program, so the market is trying to put a cap on AMW post financing - so to speak. Keep in mind that FIS already has sufficient working capital on hand. AMW currently has 13 million shares os, about 15 million fully diluted whereas FIS has 125 mil os, and 150 mil fully diluted.

 

Scenario #1) AMW does a round at $1.00 and raises $10 mil thus issueing 10 mil more shares leaving the company with a float of 23 million shares and 25 mil fully diluted. So the ratio of 150 mil shares FIS/25 mil shares AMW = 6:1. Under this scenario for each penny FIS rises AMW shold rise 6 cents.

 

Scenario #2) AMW does a round at $2.00 and raises $10 mil thus issueing another 5 million shares thus leaving the company with a fully diluted share structure of 20 million shares. So the ratio of 150 million shares FIS/20 million shares AMW = 7.5:1. Under this scenario, for every penny FIS rises AMW should go up 7.5 cents.

 

Anyhow , just playing around with some numbers and trying to guage how these companies should move if the markets are efficient. Obviously I prefer scneario #2 to #1!!!

 

As I stated last week, my average is below .70 and I would not consider selling any shares unitl at least $3.00. AS these deposits are rare gems that are hightly sought after and worth hunders of millions, you can bet that even at $3.00 I will hold the majority of my position for a few years to watch this unfold. So far I really like the way these guys are standing up to the investemnt bankers, and it would appear that they want to stand pat until after the assays are released.

 

Good luck to all longs (and to all shorts - they are the ones who will need some luck!!)

 

Jandd