Blog reader GA writes in to ask how the boardroom moves on Timmins Gold (TGD) (TMM.to) might affect the share price in the near future. OK GA, here it is, simple as you like (assuming of course you’ve read PS Dave’s good primer on the current TMM management and other things, right here):
- Sentry wants control because…
- …TMM has a bunch of entrenched executives running the show and…
- …they’re not adding value or being nice to shareholders or…
- …remotely interested in doing a M&A deal that will wrest them of power so…
- …Sentry (along with others wants them out because…
- …the plan is to let Argonaut Gold (AR.to) buy them out because…
- …Sentry and Argonaut are best pals and AR.to wants this badly because…
- …it’s dug itself into a hole by owning the going-nowhere San Antonio plus the marginal-at-best Magino and needs a deal to expand.
Bottom line: Sentry wins this proxy battle and TMM.to shares go higher because they’re bought out afterwards, most probably by Argonaut. And as Mr Market isn’t stupid it’s not going to wait until the deal happens before bidding TMM up. Which also means (of course) that if the jungledrums suggest current TMM management can fend off the proxy attack, the share price won’t rise any further or may well drop.
It is also, of course, one of the reasons why AR.to has traded like a total piece of crap in 2014:
And that despite the non-stop pumping of just about every brokerage and house in Canada, insto-fave and warrant distributor that it is.
Any further questions, GA? 🙂
Full disclosure: I own Timmins Gold (via TGD ticker), done so for a couple of months, doing ok on the deal, will sell them in a heartbeat for the right price, not telling you that price, subbers know it though.