BSR 0.00% 1.3¢ bassari resources limited

Takeovers are a funny thing and very unpredictable. Some not so...

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    Takeovers are a funny thing and very unpredictable. Some not so obvious candidates get them early and others that appear prime candidates seem to go forever without one (how many times did we hear Woodside would be taken over by Shell?). Andean was a case of two takeover offers at extreme ends of the range. First KCN made an offer very early when AND had a jorc resource smaller than BSR's (around 600koz at 3.2g/t) and the mc was at roughly $40mill. Just 2 months earlier in Oct 2005 it was around $20mill similar to BSR. That takeover offer came as a surprise to me. There was no mine plan yet, a lot of exploration work ahead and it was years from development. It was well behind where BSR is now. Then after that offer failed, Andean continued with excellent extensional exploration success over a number of years. The next takeover offer came after a FS and on the back of a much larger jorc resource and valued AND in the multi billions and well above the FS valuation. It's a shame KCN 's offer wasn't successful because ownership would have stayed in Australian hands. KCN now is valued at around $200mill. I think it would still be in the billions now if that initial takeover succeeded. Andean's assets were very high grade and very low cost.

    Maybe KCN should look at BSR now. I'm not betting on BSR having the same exploration upside as AND but it already has an open pit FS and underground scoping study showing net cash flows in excess of A$100mill and it has very clear upside on that number as the much larger inferred resources are converted to indicated and as Mak South is drilled out to jorc. BSR looks very likely to more than double those projected net cash flows and that could be in excess of KCN's current mc. BSR is currently valued at less than one tenth of what KCN is valued at, similar to how AND was valued before KCN became interested. BSR is currently too small for the majors but would be a very cheap and strongly eps acreditive acquisition for a mid cap producer like KCN (on 2015/16 earnings and beyond).

    Ideally for BSR holders we get a failed takeover offer like that initial one for AND, which initially doubles the sp of BSR and greatly increases market interest to see the sp continue higher even on a rejected offer.

    Always best not to rely on takeovers as timing them is too difficult. Best to buy a stock that is strongly undervalued and be patient as long as the stock continues to show very strong likely upside.
    Last edited by chuk: 25/09/14
 
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