My thoughts on where we go from here in terms of share prices...
To start with, just to clarify on the importance of the date of record. Stock held on the date of record will get the divvie, so if I hold 4 KATX shares on for the sake of argument June 30 and that is announced as the date of record, and I sell my 4 KATX shares to you on July 1 then the 1 KATG (my made up ticker for KAT Gold) dividend share should still come to me, not to you.
OK so the big question is, "how will this dividend affect the share prices of KATX and KATG?" Once the record date is set and announced, all traders will have a target date to aim for, by which you are either in or out. The PPS of KATX could drop after the record date because owning 4 KATX shares after that date only gets you 4 KATX shares, not 4 KATX plus 1 KATG. KATX should therefore drop by whatever the market decides is the part of the PPS that represents the value of owning 1 KATG for every 4 KATX. If this was all there was to it, then we as existing shareholders would be left exactly where we are now, just with a different structure - two companies instead of one, more actual share certificates but exactly the same value. I'll call that the "Snow argument" for obvious reasons - and absolutely no offence meant by that either!
However, there are other factors to consider. Below is my conjecture on why the KATX and KATG prices will go up, not down, based upon all of the DD I have done over the last six months, plus the recent PR. It is only conjecture, but it is based upon the facts and is eminently possible. Remember that there is a reason why the law firm was engaged. The best brains in this area have been assembled to strategise on how to maximise the potential for us shareholders.
Here goes...
1, KATG is an OTC/BB company and also is a separate trading entity designed specifically for those who want to invest in the Handcamp gold mine but not in for example copper and REE exploration, therefore the value of KATG should be higher for these reasons, adding to the PPS.
2, the O/S of KATG will be much lower than KATX, and particularly the tradeable float will be quite low, although I anticipate that Ken will add some tradeable stock to the float to make the stock sufficiently free trading to create a tradeable market. This means that the value of KATG will increase
3, an announcement from KATG that they have found gold will do massive things for KATG. Remember that KATG doesn;t have anything else "weighing it down" it's just Handcamp. So when Handcamp has gold KATG will massively increase. I reckon Daggfish is right - $2-3 easy!
4, the other gold property TwiLite is taken out of KATX and placed in KATG and again KATX shareholders are compensated with a dividend of KATG shares on a pro rata basis to their KATX shareholding. Perhaps not 1:4, depends on the value Ken places on TwiLite. KATG becomes even more valuable, so even with this additional dilution the PPS maintains or even rises again (but we all have additional shares - nice).
Meanwhile back at the ranch, what happens to KATX? It is possible that KATX could go down on the day after the record date, perhaps by say 20-25% or more even - we've had it happen before, so why not? Well here's what I believe might happen in conjunction with points one to four that will prevent that from happening...
5, KATX will PR either a JV or possibly an option to JV after jointly funded exploration (like Cornerstone) on one or more of the copper properties - let's say Rusty Ridge and/or Lucky South and/or Lucky North. I think just such an agreement has been sitting waiting to be announced for weeks, maybe months. This is timed to be before the record date, so in fact instead of KATX going down it goes up!
6, trenching, geophys and sampling take place followed by drilling commences. KATX PPS increases further.
7, another OTC/BB shell is purchased and speculation builds
8, drilling starts and the KATX PPS goes up yet again
9, drilling results come back and are announced. Assuming they are are good to excellent (I am very confident that Ken knows what's up there, he's been exploring those same hills for ten years or more) the KATX PPS starts to shoot up to the same levels as KATG - $2-3 just like KATG perhaps.
OK so now we have both KATX and KATG at $2-3. What happens next?
10, NI 43-101s and full JVs are announced for Handcamp. The same are later announced for the other properties as they get drilled. This increases the PPS of both KATG and KATC to above $4.
11, KATX merges into the new shell on a straightforward 1:1 basis so if you owned 4 shares of KATX you will end up with 4 shares of KATC (my made up ticker for the additional OTC/BB shell, which for the sake of argument I'm calling KAT Copper)
So the bottom line for me is that I am holding long across the summer. I expect to see maybe as much as $4 or more for KATC (currently KATX) and another $4 or more for KATG (currently BVIG). I anticipate the timeline for the above to start NOW and continue over the next few days and months - we could be at $2-3 or more with KATG by July if the drilling goes well and we could be the same with KATC by September easy.
Finally, and looking further ahead now. Assuming no massive dilution of KATG or KATC (and I do not anticipate there being such) it is entirely possible that Ken could start to think about eventually moving one or both of KATC and KATG across to the bigger boards. For example a stock needs to trade above $4 for at least three months before it is considered for NASDAQ. With a small float and sitting on a proven gold reserve with no other activities to cause any confusion or detract from the appeal of gold in the ground, I believe this could be possible in the mdeium term - say 12 months time for example.
We good.
Rick
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