ATAC Resources

Jaydawg wrote ( August 25, 2014 - 12:29 PM ) :

http://www.stockhouse.com/companies/bullboard/v.atc/atac-resources-ltd/2?postid=22875053

"If they're sitting on a potential monster why would they be so slow to prove it up? Are they worried about a low-ball take-out bid, so they're letting "friendlies" gather up shares to block an attempt....

It's so bizarre to see them raise money for drilling and then not do any. You'd have to think the recent big investors (AEM being one) would be very upset at purchasing stocks at a premium to the market price and then watch them drop 50% because there is essentially been no drilling for the last 2 seasons..."

I think that you may be spot on, or at least have part of the answer regarding their current drilling strategy (or perceived lack thereof). Most here have assumed that the precious metals and their stocks would commence their typical autumn rise , as has been the general seasonal trend in years gone by. Thus far howeve, the PM markets have been very choppy and often very counterintuitive.

Although cognizant of the fact that the drilling season in the Yukon is short, and that a certain segment of resource investors become jittery without more frequent drilling results (or at least require more guidance and affirmation that the company has a strategy and is executing it as planned) , with the current PM sentiment, one obviously needs to weigh the fact that the market may not respond in a positive matter (in terms of shareprice appreciation) to positive news (and in fact may view and utilize that positive news merely as a liquidity event, to reduce their positions). The company's share price garners no upwards traction, and in essence, the positive news becomes wasted, not only during the summer doldrums but otherwise in a non-responsive/risk-off junior resource market. Meanwhile, releasing those results shows our hand, making us more temptatious to possible predatory moves- the invariable hostile takeover attempt at a mere fraction of the company's suspected (but yet to be fully proven/realized ) intrinsic value.


I would think that there are at least three possible strategies in terms of protective measures from a hostile low-ball takeover attempt, in this current climate of poor PM market sentiment :


1) Do no/minimal drilling, and minimize G and A expenses, until such time that the market will properly reward expected positive drill results (at the risk of alienating a segment of the company's shareholders who are more short-term oriented)

2) Drill, but delay the release of the results (likely illegal if the delay is too long, and nevertheless likely extremely difficult/ not feasible to prevent leaks).


3) Drill some core, and just not send it to the lab, or delay sending it to the lab , until the PM market improves. {Or alternatively, send the core to a lab which one knows is "backed up" (not really plausible this season hgiven that hardly any exploration companies having substantial active drilling campaigns)

In terms of Agnico Eagle (or another large shareholder) being upset that their investment has dropped ~50%... likely not a worry if they have a long-term investment strategy of developing the property themselves. In that case , their primary objective would probably also be to keep the true value of the asset unknown/uncertain, so as to prevent potential rivals from stealing it from beneath them. I have not looked at their (Agnico Eagle) current balance sheet, but they may be biding their time until their coffers are sufficiently capitalized to develop the property themselves or with a partner. Additionally, the low share price allows them to potentially acquire an even larger share of the asset, should further financing be on the horizon. Their short-term unrealized paper losses would be far offset by future rewards in having a larger share of the pie.

In any event, even if their (AEM) investment was meant to be a short-term one (ie undertaken for the sole or chief reason of capitalizing from an expected ATAC takeover- bid) their investment in ATAC is likely rather small in terms of their overall balance sheet.

Just some thoughts, and completely open to rebuttal..

Cheers,
Luker