Monday, May 12, 2014
On the paucity of available junior mining warrants
I thought if we ever finally get this supposed rebound in gold & its miners, that I might try playing warrants on the upmove.
Problem is, so many available traded warrants are at joke prices now. Example: Kinross $21.30 strike for Sep 2014. Another example: Gran Colombia at $65 strike for Aug 2015.
Even Franco Nevada at $22 below strike doesn't interest me. I don't want to play below strike and I don't want to pay a time premium on a joke.
Fact is, the whole warrant scene sure looks to have been killed real bad by these past few years of down markets and nonexistent financings.
In any case, warrants are a mug's game and you can really lose your shirt, so I'm not that interested. Still, here are two that I found interesting:
DPM is a Nov 2015 $3.25 strike, and the stock flies in either direction like a bat out of hell as you can see in this chart. I have no idea if they're in dire straits right now, but I'd read up on them if we ever got another bull that gave DPM the chance to pop. My problem with it is paying 90 cents for the time, when a strong move in DPM can give you a great profit on the stock itself.
I have utterly no idea about who Torex Gold are. I think IKN made fun of them once or twice? But, they have an Aug 2014 $1.50 strike (not very far from the money) that's apparently selling for 4 cents right now. Question is, would they even be able to break $1.50 by August? Not knowing anything about this company at all, I can't even provide an answer to that question.
Note in all these cases, not only am I not suggesting anyone buy warrants, I'll go one step further and call you a loser for even thinking about it.
But I thought it would be interesting to illustrate how little there really is left in the miner warrants market. These really are among the 3-4 best offers you'd find right now. Pretty unexciting.