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Petaquilla Minerals Update- 6-15-2010
[Updated on 6/16/2010 to correct my typo on the date I received the Petaquilla's email]
Here are the exact words of the response I received from Petaquilla Minerals this morning:
It is to my knowledge that the bank had requested more information, that why it has taken longer than expected. The bank is in their final stages of diligence and it’s expected to have a resolution on the gold loan within days.” 6/15/2009 Petaquilla
[ I received this message on the morning of 6/15/2010 from Petaquilla Investor Relations]
Let’s take a look at this message and try to glean what we can out of it by looking at what was said and what was not said. Many people have wondered if the bank deal was in trouble, canceled, or in some sort of limbo. Apparently the refinance deal is not dead but very alive and kicking!
The reason for the delay, is that bank wanted more information. Is this a reasonable explanation for the long delays? From my personal experiences of working much smaller real estate investment deals, there are many delays before making it to the closing table. There are several inspections, appraisals, title searches, financial statements and projections, credit reports, and supporting documentation that is typically required by the lender before a loan is approved. It has always taken longer than I expected complete the loan process. Banks tend to be data hogs.
For a case like Petaquilla’s, I can only imagine the amount of diligence being performed by the bank. So it does not surprise me that they want additional information for a company with such a checkered past as PTQ. Not being able to get an accurate time table from the bank is not a fault of Petaquilla Minerals, as they can not force the bank to complete their diligence when they want them too. Banks move at their own pace.
This leads us to the next part of the message, “The bank is in their final stages of diligence.” This likely means the bank has everything it needs at this point in terms of documentation, inspections, etc., and all the preliminary work has been completed. However this does not mean the financing has been approved yet, although it could mean that.
My experience in dealing with banks near the last stages of the loan process, is that, they will typically tell you informally that everything is looking good and your loan is approved. If you reach this point, you are pretty much home free. So if Petaquilla has reached the final stages with the lender, it is very likely that the deal has been approved informally. This is just my opinion.
This position is further supported by the last part of the message, “it’s [the bank is] expected to have a resolution on the gold loan within days.” The definition for resolution is: “settlement: something settled or resolved; the outcome of decision making”. This appears to be pretty positive if we take resolution to mean settled. A much stronger word would be approved or finalized. I may be splitting hairs here, but either way it looks to me that this deal is done and should be announced shortly.
You have my opinion on this, what’s your take on this?
Related Posts:
- Petaquilla Minerals Update 9-20-10
- Petaquilla Minerals Financing Update
- Petaquilla Minerals Update 7-26-2010
- Petaquilla Minerals Update 6/02/2010
- Petaquilla Has NOT Suspended Production!
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I think that petaquilla management needs to keep shareholders informed and put some effort to curb the share price erosion. They have sent everyone on my forum the same email since early May. The management cannot be trusted with timelines. They will probably release something in July with their financial statements. Until then, this is all rhetoric.
I couple of folks emailed me about the date associated with the email. My apologies, I made a mistake on the date.
Unfortunately this happens when you write in a hurry. Also, I added the date to the end of the Petaquilla’s message to make it clear, when I received the email.
I apologize for any confusion this may have caused anyone out there.
Hi Deex,
Thanks for sharing your opinion. I agree that Petaquilla needs to improve their communication with shareholders. As you pointed out, there has been an ongoing distrust with Petaquilla’s past and now current management.
As I stated in my post, dealing with lenders always takes longer than you think it will. I can’t really fault Petaquilla’s management on the delays here as it is a pretty big deal they are trying to work out. I am sure the lender is moving at its own pace because they don’t want to lose their money either.
However, I certainly understand your frustration with their communication (or lack of it ) and all the delays. Also, it is hard to trust the management of this company based on their past. That’s why typically, I do not invest in companies with shaky management. Petaquilla is my exception to this rule and hopefully it will payoff and not come back to bite me.
My contact in Petaquilla seems like a decent I guy. I have talked with him several times and corresponded with him via email numerous times as well over the past year. I get a pretty good vibe from him. Last time he told me they were weeks away from closing the deal which was back in mid April, now he’s telling me that they are only days away.
From where he sits and what he knows, I think he’s telling me the truth. Time will tell. I got a lot of money riding on this deal. I am even thinking about making a trip down there.
Unlike many other analyst, who make money selling newsletter subscriptions and rarely invest in what they recommend. I do put my money into every recommendation I make.
Also, I don’t do this professionally. I have a full time job in a separate field, a full time family with kids. I do all the work on GoldStockMania.com by myself late at night, early in the mornings before work, and whenever I can spare a few minutes.
I don’t get paid to write anything on this website or to promote stocks…. So I am just one guy trying to do the best I can with my investments and share my findings with others… that’s all.
I don’t understand this concern with share price erosion. I visited the StockHouse Blog and was blown away by the hysteria. Low prices are a gift. A chance to add to your shares. If you think the company is going to close its doors, sell now before it goes any lower and you lose even more. Invest in CDs for a steady growth.
IMO it is a pointless waste of time to worry about the current fiat currency value of a mining stock. Eventually, at the rate we’re going, the dollar will probably be worthless, and we could end up with a new improved regional/global currency (hopefully tied to gold so it has some value). Instead, think in terms of “How many shares do I have?” or “How many ounces do I have?” That is all that is going to matter in the future. You are building an asset. We are still months and possibly years away from the mania phase that will make prices skyrocket. Add to your assets while the prices are low.
@SilverHog
You raise very good points! Now is the time to buy while prices are very well discounted. I wonder too, why do people complain when they have the option of getting out or even not getting in.
There are many of stock plays out there, people should choose the ones they want to be on and dump the ones they don’t.
It is difficult for people to separate price from value, but we really need to start. I also believe we need to drop the dollar = value illusion. It has been with us for so long that it is difficult for people to understand value without thinking in terms of dollars or other fiat currencies.
Great comments Silverhog, I look forward to reading more of your comments in the future.