I closed my position at $1.74-$1.9. I think that Selwyn’s current valuation is reasonable given that:
- Selwyn burned through a few million of cash in overhead, legal fees (Selwyn paid Samara Capital and RCF’s legal bills), and severance to the CEO and other employees.
- The mine did not find a buyer (yet) and has been put on care and maintenance. If it has been mothballed, it means that the mine is not economic. If the company has been trying to sell the mine (which it probably has been) and hasn’t found a buyer, it probably means that the market for the asset is weak.
The stock closed at $2.12 yesterday.I would say that this trade worked out fine. If you had bought at $8 and sold at $1.74, you would have made a low-risk 9.25% return after the $7 dividend (all figures split-adjusted).