ABX Raises $1.25 Billion; AUY may be the buyout target
What do you think the buyout price would be? I estimate 2B cash, and a 1:3 abx:auy shares.
That comes out to $9.66 in stock (at abx $29) and $2.86 cash per share = $12.52 or a 50% premium to current AUY prices. Total purchase price = 8.7B
This would dilute ABX to a little over 1B shares outstanding as the stock swap would amount to 232MM shares.
I can see AUY holding out for a 1:2 abx auy and 2B cash. That comes out to $14.50 per share and $2.86 cash per share = $17.36 or a +100% premium to current prices. Total purchase price = 12.1B
Reasonable would be a 1:2 abx auy and 1B cash = $15.93 or just under a 100% premium to current prices. Total purchase price = 11.1B
The latter would amount to 350MM additional ABX shares, bringing it to +1.1B outstanding.
With AUY producing 2.2MM oz. per year at pog $800, it would take just 6.3 years to payoff.
AUY has 35MM reserves, measured and indicated. 6.3 years of depletion at 2.2MM oz per year will leave 21MM reserves measured and indicated remaining; at $800/oz = $16.8B. Inferred resources add an additional 15MM, for a total net R,M&I,Inferred of 36MM oz. At $800/oz that is $28.8B.
Looks like a no-brainer to me. If pog goes above $800 projected breakeven compresses exponentially, as does depletion.
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