Take physic, pomp

Updating Pachamama (PMA.v) vs Regulus (REG.v)

As we mentioned yesterday, there was a decent arbitrage on display between these two. Here’s the updated chart…..
…and it’s all but disappeared now, thanks to the move in REG from 70c to 90c in a touch over 24 hours. So we’d like to thank Axemen Resource Capital for giving us lil’ retailers the chance some easy money winnings as fruit of their price propping (because it’s usually the other way around, ain’t it guys.…).

UPDATE: REG.v now 93c, market cap at $33.67m, arb now under $2m

UPDATE 2: Ok, to stop the mystery play here’s part of a long note about REG.v that appeared in IKN85 last Sunday. Basically, subscribers knew that the 70c and 75c prices offered up yesterday were a bargain and a decent little quicktrade was in the cards.

  • Now for the arbitrage calculation with Pachamama Resources (PMA.v), holder of the other 50% of the Rio Grande project. At Friday’s close for PMA.v of $0.80 and via the 44.3m shares out at the company, PMA’s market cap stands at $35.4m. PMA has a similar amount of cash at bank as the new REG.v (not exact, but close enough), so the two treasuries basically cancel each other out.
  • If we assume REG.v’s 50% of Rio Grande is valued the same as PMA’s 50%, REG.v should trade at a little under $1 next week.
  • This presents a potential opportunity, ladies and gentlemen readers of The IKN Weekly. It’s possible that REG.v sees selling tomrrow morning as people cash in on the new issue and turn paper into cash. We went through this argument with Renaissance  Gold (REN.v) when it was spun out of AuEx Venutes and it didn’t happen and we also went through it when Canplats spun out Camino Resources (COR.v) and it did happen, so if it does tomorrow your author would be interested in adding REG.v at a price that shows a significant discount to that of PMA.v.
  • On the other hand, it’s perfectly possible that REG.v is bid up tomorrow morning, as a price of above $1 (pretty close to ‘fair value’ accoridng to our line through PMA.v) would mean there were less pressure from any large institutional holders of REG.v to dispose (recall that some instos have a “no holdings under $1 rule” and may feel forced to sell if REG.v trades lower).
  • It’s difficult to say which way the wind will blow on the trading tomorrow (e.g. at the table last night, the Antares team had split opinions and could see both sides of the equation) but we should keep an eye on proceedings as there is at least the potential for a bargain.


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