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European Minerals - A Look at the WarrantsDudley Baker European Minerals Corporation (EPM-TSX) is developing the 2.2 million ounce Varvarinskoye gold-copper deposit in Kazakhstan. Varvarinskoye is situated in a rural area but is close to the industrial city of Kustanai, which has an excellent mining services sector. Kazakhstan has had tens of billions of dollars in foreign investment flow into its resource sector over the last decade, and enjoys strong GDP growth and low inflation. Standard & Poors ranks Kazakhstan's federal bonds on the same level as Mexico. From the Company's August 15, 2005 press release, we briefly quote, "Overview: In April 2005, the Company completed a public offering of 138 million units raising gross proceeds of approximately $85.2 million... In June 2005, the Company announced the completion of the acquisition of the remaining 14% interest in JSC Varvarinskoye that it did not already own... The Company's working capital amounted to approximately $76.4 million as of June 30, 2005..." For more information on we recommend you visit the Company's website, European Minerals and the associated links below. The decision is always with the investor as to which investments to make but assuming that you like the European Minerals story and are considering buying the common stock, we would like to take this decision one step further. Since warrants are our business and knowing that European Minerals has not only one but two warrants currently trading on the TSX, we would like to share our analysis with you. Terms of Warrants: Symbol: EPM.wt EPM.wt.A Expiration date: 23-December-2008 11-April-2010 Exercise Price: U.S. $ 1.20 C$ 1.20 So, what this means to investors is that we have the right, not the obligation, to purchase the common stock of European Minerals at the exercise prices above and expiring on the above date. If investors are expecting a significant rise in the price of the common stock, what will happen to the warrants? And in the case of European Minerals which warrant offers the best opportunity. Let's take a look using our summary analysis as of Monday's close.  Conclusion: We would have to conclude that if an investor is considering the purchase of the common shares they should take a serious look at the warrants in lieu there. There is sufficient time remaining on the life of both warrants and both warrants provide an incredible leverage over the common shares. Given that European Minerals has two warrants we would recommend the warrant providing the most leverage which above is the EPM.wt. HOWEVER, given the fact that the EPM.wt.A warrant has an additional 15 months or so of additional life, a case could be made to giving up the slightly increased leverage of the EPM.wt for the additional time on the "A" warrant. Bottom line is both warrants will do extremely well given a large increase in the price of the common stock. Aug 29, 2005 Dudley Baker is the owner/editor of Precious Metals Warrants, a market data service which provides you with the details on all mining & energy companies with warrants trading on the U.S. and Canadian Exchanges. As new warrants are listed for trading they alert you via an e-mail blast. You are provided with links to the companies' websites, links to quotes and charts, tips for placing orders and much more. Precious Metals Warrants do not make any specific recommendations in their service. They do the work for you and provide you with the knowledge, trading tips and the confidence in placing your orders. For those investors seeking more knowledge on warrants do visit the Learning Center at Precious Metals Warrants, where you will find much more information and examples to enhance your learning experience. You may also sign up for The Warrant Report free weekly email. Disclaimer/Disclosure |
