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IMZLF: Great Value Arb?

November 07, 2013 | About:

Yesterday I posted a list of stocks I’d be going through hunting for value on the pink sheets. And, crazy as it sounds, literally the first ticker that popped up piqued my interest. I know it sounds unbelievable, but I swear I didn’t rig the rankings!

Anyway, IMZLF is the U.S. listing of Canadian company International Minerals. You can find their company website here.

Most of the assets of the company are getting acquired by Hochschild Mining. As part of the acquisition, International Mining Shareholders will receive $2.38 per share plus one share in a new SpinCo that contains a bunch of cash and some Nevada assets.

What makes this so interesting is that the press release values the total package to be received by shareholders at C$3.04-3.31. Shares are trading at C$2.78, so investors today are getting the total package at a serious discount to what the transaction was valued at.

Am I investing in the stock / arb play? No, I’m not. The reason is simple: I have a strict “no miners” investment policy because I consider them so far outside my circle of competence. But I think there are a lot of interesting dynamics going on, and an enterprising reader may want to either play the arb or wait for the spinoff to be complete and take advantage of the potential uneconomical selling that I’m certain will happen post spin.

Either way, I fun start in the hunt for value.

No disclosure.

Rating: 4.0/5 (1 vote)


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