Vil­lage Main Reef

Finweek English Edition - - HOUSE VIEW - By Simon Brown

No, I have not l ost my mind be­cause I ’m sug­gest­ing a gold stock to buy − the rea­son­ing has noth­ing to do with be­ing bullish on gold or bullish on gold min­ing com­pa­nies (I am nei­ther). Rather it is be­cause of the of­fer by Heav­enSent to ac­quire all the shares in Vil­lage at 1 225c.

The lat­est up­date says that the of­fer is now “a firm in­ten­tion of­fer” and the monies payable if the deal goes ahead have been lodged with the Takeover Reg­u­la­tion Panel.

So buy­ing Vil­lage at be­low 1 100c (the stock is trad­ing at 1 070c at the time of writ­ing) gives a very pos­si­ble exit price of 1 225c if the deal goes ahead. One is­sue is to keep the pur­chase costs low and one could get a re­turn of over 10%, and while we don’t have any time­lines, it is un­likely to take more than six months.

The risk is that the deal might col­lapse, and while that seems un­likely, it is pos­si­ble. The re­sult be­ing that one is l eft hold­ing a gold mine and the price will likely fall.

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