YNG: Gets financing deal done

YNG announced the results of the warrant exercise and additional capital raise. The warrant exercise raised the capital management had initially planned but after some major hiccups. It definitely wasn’t a smooth ride for shareholders but the capital raised should get the company going on its operational plan. The company also sold 33M shares and 33M warrants to Deutsche Bank. Although I dislike companies selling shares when they are cheap, the potential 66M shares are small compared to the 900M shares O/S after the recent warrant exercise. Also, this is the price to pay for the 120M financing w/ Deutsche and the screw-up by Orifer. The company also is working on finalizing a 120M financing from Deutsche Bank through a Gold Forward sale.

We now have a company where the management has access to the capital needed to execute on its plan. The investment is now dependent on whether this management team can deliver on its short-term goals of 150K oz of production and future goals of increasing production to 400K oz.

7 responses to “YNG: Gets financing deal done”

  1. not optimal – but nonetheless, the company obtained financing and now, as you said, we can at least see if they are going to execute according to plan.

    • Both are tricky to value. GGP’s value depends on how well management is able to execute its plans. The plans include reduction of interest rate, sell poor performing assets, expand via potential acquisitions, and repricing of lease rates. I think you have the right management team and backing from big investors for it to happen. I look at GGP as a place to hold cash until something much more appealing comes along. I think holding the shares at current price will still get you to outperform the market (in a 2-3 yrs time horizon).

      HHC is much harder to put any value on. Tilson recently presented on HHC and put a valuation of $71-141/share. That is a huge valuation range, that shows how hard it is to value. It is hard for me to see how you lose money on HHC. The big risk is a double dip in real estate or the economy or management does something stupid. I think the real estate prices are turning around, or atleast have bottomed. We should know in the next 6-9 months what management has in plan for some of its assets. I look to hold HHC until it hits low $100s. Then, similar to GGP, I will revisit it and look at what other opportunities are around. If something much better comes around then I would consider selling it.

    • You can watch Todd Sullivan’s ValuePlays TV show for 5/31/11 to get a sense of how he values the Wards Center property. This is a crude valuation but shows just how cheap HHC is. Also, the valuation makes lots of assumption for NOI for Wards Center. Which shows how tough it is to value HHC. This is probably the biggest reason why HHC is cheap. Just because you can’t value it clearly, you have valuation that is selling at dirt cheap.

  2. just listened to yukon conference call. yielded some optimism with the 10k in may production. i guess things are somewhat dependent on the actual decay of the plant. the question i was hoping someone would ask was one relative to the level of maintenance cap ex subsequent to the winterization/improvements during the september shutdown. if it’s a 30 year old plant, wondering if maybe there’s going to be this constant cap ex financing issue across the years as different things break down?

    • The CC sounded a bit sugar coated. The 10k production in May sounded good but we need a couple of quarters of steady production to prove mgmt can delivery the 150k goal. CapEx is a big question and mgmt’s comments of potential equity sale didn’t sound good. I get a sense that mgmt really needs to hit the 150k production in early 2012. Then we could see potential acquirers coming around. I wasn’t too pleased w/ the CC. At this point I’m at a wait and see mode. We have 2 quarters left in 2011 (not counting Q2). I want to see the 10K production per month in Q3. In Q4, I want to see the improvements from the September project. If mgmt isn’t able to deliver, I would reconsider this position.

  3. yeah, that equity in the future sentence by baldock kind of surprised me. i didn’t get why they had to take questions via email versus phone – not sure if that’s how some canadian companies do things.

    on the plus side, the fact that deutsche has vetted this out somewhat is a good thing and the fact that the insiders are still long. i check canadianinsider.com every few days to see if anyone’s selling. if the insiders start selling in clusters, i’d definitely reconsider my position.

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