Adrian Day - Mon, Jul 11, 2016

Reservoir Minerals Goes Out in Glory

Adrian DayMoney manager Adrian Day updates the conclusion of the saga of Nevsun Resources' acquisition of Reservoir Minerals.

The acquisition of Reservoir Minerals Inc. (RMC:TSX.V) by Nevsun Resources Ltd. (NSU:TSX; NSU:NYSE.MKT) has been completed, after the latter added a CA$2 cash bonus to its two-for-one share offer.

Nevsun Resources is a cash-rich, operationally strong company, and the combination with Reservoir produces a solid mid-tier base metals company. The cash flow from its mine in Eritrea (shifting to a zinc-heavy part of the deposit) plus the potential from the developmental copper and gold project acquired from Reservoir, gives good diversification. The stock pays a decent dividend. Over the longer term, it is potentially an acquisition target in its own right.

Reservoir shareholders received two Nevsun shares plus CA$2 for each Reservoir share.

A cloud hangs over the party

The great conclusion to this story is somewhat marred by the tax treatment for U.S. shareholders. Nevsun obtained an opinion indicating that the acquisition would be a taxable event on all shares received (plus the cash of course), and they filed with the IRS to that effect. Given this, most custodians are likely to report the share exchange as fully taxable, and unless a Reservoir shareholder has a particularly knowledgeable and assertive CPA, that's the way it will be.

Lastly, we wish to express our thanks to Miles Thompson, Reservoir's founder and chairman; Simon Ingram, CEO; Chris MacIntyre, corporate development; and the exploration team, all of whom made Reservoir the tremendous success it was.

Adrian Day, London-born and a graduate of the London School of Economics, heads the money management firm Adrian Day Asset Management, where he manages discretionary accounts in both global and resource areas. Day is also sub-adviser to the EuroPacific Gold Fund (EPGFX). His latest book is "Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks."

Disclosure:
1) Adrian Day: I or my family own shares of the following companies mentioned in this article: Reservoir Minerals shares that have now become Nevsun Resources shares with the completion of the acquisition. I personally am or my family is paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. Clients of Adrian Day Asset Management own shares of the following companies mentioned in this article: Reservoir Minerals shares that have now become Nevsun Resources shares with the completion of the acquisition. Clients of Adrian Day Asset Management owned over 5% of the shares outstanding of Reservoir Minerals. I determined which companies would be included in this article based on my research and understanding of the sector. Statement and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) The following companies mentioned in the article are sponsors of Streetwise Reports: None. The companies mentioned in this article were not involved in any aspect of the article preparation or editing so the expert could comment independently about the sector. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
4) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

InvestorsGuru.com publishes interesting contributor articles in addition to its own content. We have not verified any of the above details.

Sign-up at InvestorsGuru.com (or blog.InvestorsGuru.com) for our Small Cap Stock Observer newsletter, and to set-up your own My Portfolio, My Watchlist & Alerts and News by Email preferences, or to post at our AnyTicker.com Bulletin Boards. Free!

Please note that nothing in this report should be taken as a recommendation in any way, and that everything from InvestorsGuru.com is subject to the terms of our Privacy Policy and Disclaimer.

comments powered by Disqus

Detailed Quote Portal

symbol lookup | (TSX add :ca)

Membership Privileges

  • Investors Guru Small Cap Stock Observer - newsletter emailed monthly!
  • Featured Stock Profiles - emailed on occasion!
  • News by Email - as it's released, according to your My Preferences!
  • My Portfolio - login to view or update your holdings, or have it emailed daily!
  • My Watchlist & Alerts - login to view or update your stock radar list, and set price triggers for email alerts!
  • Bulletin Boards - no need to request boards, just Quote it! Social Sign-on & Share your ideas, observations & trends!
  • Find it all! Find it Fast! Comprehensive stock research webpages. No more endless clicking!

Email: (see Privacy Policy)
Password: (4-15 characters)
Username: (4-15, BB posts etc)

unsubscribe anytime


Bookmark and Share

 Subscribe in a reader

Our Mobile Site