Champion (CHA.TO) backdoor to Red Back in Ghana?
Over a month ago I bought a small amount of Champion Resources (CHA.TO in Toronto) as a "backdoor" way of buying an interest in Red Back Mining (RBK in Australia), a company with good-looking properties in Ghana. I don't know a convenient way to buy Australian stocks.
From the last things I read, Red Back wants to be listed in Toronto, and has chosen to merge with Champion and then change the name of the merged company to Red Back, to be on the Toronto exchange. Before buying some Champion, I looked at the proposed ratio of Champion to Red Back shares, and it seemed that you got a lot more of the resulting company (for the same money) by buying the thinly-traded Champion (then). I just did an informal calculation, and there are several variables including the share ratio, the prices of the two stocks in Canadian and Australian dollars, the currency ratio, etc. I would like it if someone more competent, here on this board, would do the calculation and confirm whether I'm right that Champion is relatively undervalued.
Red Back has at least two important concessions near Bibiani west of Kumasi. Champion is being used merely as a "vehicle" for a Toronto listing, but it also happens to have a phosphate mining concession in Guineau-Bissau near the Senegal border. They were trying at some point to sell this, for 10 million, as I remember. So that could be a little (potential) extra you get from buying Champion, beyond it's Red Back merger value; I left that out of my calculation.
Because Champion is due to become Red Back with Ghana properties, I think Trading Fool should list CHA as a West African explorer stock. (Also put Australian RBK alongside the Adamus link, and include Akrokeri-Ashanti (AKR.TO)if you want to include placer mining).
[Background: I have some Ghana mines and explorers, almost all the publicly traded ones except Moydow, AMI, PMI, Axmin, Red Back and Adamus. I have, and like, Cassidy in Guinea too. I sold my Nevsun (NSU.TO) to buy CHA.TO, CDY.TO and AKR.TO. I just got back from a trip wandering around rural Ghana. I like some stocks traded on the Ghana Stock Exchange (non-miners).]
FL
