I invested in SYR after a tip from a family member who I know has done well in shares, but sold after the Glencore pump at a nice profit. However, I think there is still an opportunity to make money on this, regardless of how diluted CSE's stake has become. Here are a few reasons, and keep in mind I'm learning like everyone else so if you think I'm wrong don't hesitate, anyways here it goes:
The first opportunity is simply the purchase of SYR shares at a significant discount through purchasing CSE shares. CSE owns, as everyone knows, 11,000,000 shares in SYR, representing a 5% stake in SYR post-dilution. At $3 per SYR share that is $33,000,000 worth of SYR stock at current value. Though I believe there is still significant value to be realised as it moves closer to production. The MC of CSE is $23,505,858 (106,844,810 x .22), which is a discount of 40% [(33,000,000 - 23,505,858)/23,505,858 = 40%]. The only cause for concern that I could see would be the management of CSE's cash flows until SYR reaches production and the possibility of paying a dividend. However, because of the recent sale of the share entitlements worth $578,948, in addition to about $407,351 in cash after the last quarter the company has by its own estimates about 8-10 quarters of cash burn left ($986,299/$100,000 per quarter = 9.8). Which is fine because SYR intends to have production within 4-6 CSE quarters. So you could buy CSE shares and make money simply by a mis-pricing of its ownership in shares of SYR.
The second opportunity which compounds quite strongly on the first is the future estimated value of SYR shares. Which can be valued simply by looking at the last Feasibility study it released which stated that post-tax NPV at a 10% discount valued the mine at $1,125,000,000 or roughly $4.80 post capital raising. In terms of CSE this means each CSE has an estimated future value in terms of SYR shares of $0.49 per CSE share, a possible return against current prices of 125% (.49 - .22 = .27/.22 = 1.25). More important to me personally is that SYR is forecasting FCF of $160,000,000 per year for the first 10 years, or $0.69 per SYR share x 11,000,000 = $7,540,622 in FCF that CSE is entitled to as a shareholder in SYR.
Lastly, there is also the possible development of a coated spherical graphite facility which has very high forecast economic returns with a comparatively low cost of capital investment.
I don't know if this is right, because it sure is starting to look for to good to be true for me.... Love to hear others opinions.
The first opportunity is simply the purchase of SYR shares at a significant discount through purchasing CSE shares. CSE owns, as everyone knows, 11,000,000 shares in SYR, representing a 5% stake in SYR post-dilution. At $3 per SYR share that is $33,000,000 worth of SYR stock at current value. Though I believe there is still significant value to be realised as it moves closer to production. The MC of CSE is $23,505,858 (106,844,810 x .22), which is a discount of 40% [(33,000,000 - 23,505,858)/23,505,858 = 40%]. The only cause for concern that I could see would be the management of CSE's cash flows until SYR reaches production and the possibility of paying a dividend. However, because of the recent sale of the share entitlements worth $578,948, in addition to about $407,351 in cash after the last quarter the company has by its own estimates about 8-10 quarters of cash burn left ($986,299/$100,000 per quarter = 9.8). Which is fine because SYR intends to have production within 4-6 CSE quarters. So you could buy CSE shares and make money simply by a mis-pricing of its ownership in shares of SYR.
The second opportunity which compounds quite strongly on the first is the future estimated value of SYR shares. Which can be valued simply by looking at the last Feasibility study it released which stated that post-tax NPV at a 10% discount valued the mine at $1,125,000,000 or roughly $4.80 post capital raising. In terms of CSE this means each CSE has an estimated future value in terms of SYR shares of $0.49 per CSE share, a possible return against current prices of 125% (.49 - .22 = .27/.22 = 1.25). More important to me personally is that SYR is forecasting FCF of $160,000,000 per year for the first 10 years, or $0.69 per SYR share x 11,000,000 = $7,540,622 in FCF that CSE is entitled to as a shareholder in SYR.
Lastly, there is also the possible development of a coated spherical graphite facility which has very high forecast economic returns with a comparatively low cost of capital investment.
I don't know if this is right, because it sure is starting to look for to good to be true for me.... Love to hear others opinions.
