Investing

Ivernia, which I wrote about here and here. Announced today that they are buying out the 49% interest held by their partners in the Magellan mine. Assuming the purchase was made entirely with cash it would add about 35% to IVW's net worth. As the purchase will be made (I'm assuming) using equity it adds about 15% to IVW's net worth. The news release does say that IVW will be paying for part in cash, but that almost certainly means selling equity and then paying in cash using the equity proceeds.

All in all, I estimate IVW's net worth after the transaction at around 2.70 CAD per share which has about 33% price appreciation with lead at .4475 per lb (which were the assumption in my most recent run of the model with IVW as a 51% owner). This will provide a little more upside leverage to lead prices also.

The key determinate to the upside of the acquisition will be the price that the equity is issued at. If it is issued at $2.05 then there is 17% accretion, at $1.8 it is closer to 14%.

My model has the mine only recovering 1.1bn pounds. If in fact that recover closer to the 2.2bn pounds in proven and probable. Then the acquisition is much more accertive, as IVW is getting a decent deal assuming the current mine plan. If there are more ounces mined (and this applies even more so, if they are mined sooner) then the deal gets even better for Ivernia.

A good move by management and possibly a great move if we hear about upgraded reserves and a new mine plan in the near future!