News

June 03, 2009

Ovoca Gold Is A Russian Explorer, Well Funded, And With Friends In High Places

By Charles Wyatt

Life changed dramatically for the Irish company Ovoca Gold when a big Russian company took a close look at its main attraction. Right in the middle of some of the darkest days the world’s junior mining sector has ever known JSC Polymetal realised that there was an ideal opportunity to acquire Ovoca’s Goltsovoye silver deposit in Magadan Oblast in the far east of Russia. The price offered was tempered by market conditions at the time - US$11 million in cash and 7.5 million shares. Cash is always cash, but the Polymetal shares at that time were priced at around US$2.75 each on the London Stock Exchange so Ovoca pocketed the equivalent of US$31.625 million.

But it gets better. Cash is always cash, but the price of Polymetal shares is now US$8.75 so that puts a value of US$76.6 million on the original deal. Cash being cash, however, Ovoca sold 3.75 million of the shares in March at US$5.75 which was a sensible move at the time. Either way, Ovoca is now in a strong financial position. Last month the company had US$34 million in cash as well as Polymetal shares valued now at over US$25 million. Compare this with the current market capitalisation of...