There recently was a post on the stockhouse.com Aurcana message board that I think illustrates a point. I've not included a link and have edited out the author's name because I don't want to especially attack the writer. Its questionable whether I should publish this post as I don't really want to make fun of people in distress, but decided to proceed as the point to be made is worth hearing. Here's the message board post:
"What about the takeover offer ?
Do you think at some point there will be a takeover bid from Silver Standard ? Afterall AUN trades at only $0.10 holds 3 mines and over 70mil oz ag in resources. AUN looks very attractive right now as a takeover target. On top of that Silver Starndard owes 14% of (Aurcana ? Shafter ? Not sure what they own). If that hapened what would be their offer per share ? Any ideas ? So unles SP moves back up at least into mid 20's Aurcana will be EATEN at some point.
AUN's marketcap
as of today = $10,858,393
"
AUN's market
"
Having read message boards for a number of years, I've concluded that the beginning of any takeover discussion, when takeover was not previously integral to the business plan, marks investor disappointment and shear desperation. It means the stock price has crashed and there really doesn't seem to be any fundamental reason for the stock to recover. This is clear example.
I wonder if one could write a program and search message boards for the term "takeover" as a way of searching for stocks to short.
Shortly after this message appeared, Aurcana published their third quarter results. The results were that their one producing mine (silver, copper, zinc, lead) was losing money, that the rest of their business was spending significant money and that their cash reserves were limited. The producing mine results signal a desparate situation, as the price of its metals has fallen further since the end of the quarter.
It looks to me like Aurcana is going to zero, like Strategic Resource Acquision (SRA.TO), Blue Note Mining (BN.V), Centure Mining (CMM.V), GBS Gold (GBS.TO) and other Jr producing miners headed in that direction: Acadia Mining (ADA.TO), Liberty Mining (LBE.TO), First Nickel (FNI.TO) . Best case, apart from an explosion in the price of silver, I expect to see their one producing mine closed and some kind of dilution as they revert from a producer to an advanced development mining company.
MontyHigh
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