Terrane Metals–An interesting Situation

Precious Metals Warrants (10/19/2009)
"Terrane Metals is developing into a very interesting situation requiring the attention of current shareholders and warrant holders. . .An unnamed source has speculated on the possibility of a decision by Goldcorp, the JV partner to take over the entire company. Their estimated takeout price per share would be between $0.85 and $1.50. If this would happen, where does this leave those holding the warrants?

Let's take a good look at the situation. The current exercise price of the warrants is $0.85 and the common shares are at $0.77, thus the warrants have no current intrinsic value but yet are trading at $0.35. What if a merger bid is made in the next few weeks or months?

It is difficult for me to imagine that the warrant holders would be left out of the deal but this is a possibility if the takeout is at $1.25 or less. The warrants have been very active lately suggesting to me that 'smart money' is buying the warrants. Just a guess on my part.

For those owning the warrants, this can be a difficult decision; but the good news is that all of you should have profits on the warrants. Some warrant holders should be very happy if you picked up the warrants around the low last year of $0.01. That's right 1 penny and they are now at $0.35 and probably going higher, a 3,500% gain is not too bad.

If you do not own the shares or the warrants, the best thing for you to do is to buy the common shares thus being assured of a nice profit if a takeout occurs and taking the risk out of the game."

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