Archive for the ‘CVE: CKB’ category

Calico Resources (CVE: CKB) Downside Realized

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An email I just received from Buck – the CEO of Calico Resources – is all one needs to know. Looks like Rockstar will not proceed with the purchase and the downside case is realized.

We have issued a press release regarding RockStar. They did not make the second payment.

– Buck

Calico Resources (CVE: CKB)

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Sometimes, free money can be found. Usually it comes with a caveat.

Calico Resources (CVE: CKB) is one of those opportunities. It trades on the Canadian Venture Exchange for less than $0.23 (approximately $11MM). In 1 month, they will be selling their primary asset for $27.5MM. This information is publicly available (see here and the update here).

Once you factor in the issuance of dilutive shares (64.15MM shares), you get a value of $0.43 per share (that is $27.5MM / 64.15MM; note that I am assuming their historical operating losses shield them from paying taxes on this transaction). So if this deal closes, CKB will have cash worth nearly 2x its current market cap, plus retain a 1% royalty on the project if it gets developed.

From a risk-reward perspective, this is incredibly attractive: the market is offering you 2x upside versus perhaps ~50% downside. Further, once you factor in the probability of the deal closing (a scenario I view as “high probability” for the reasons cited below), you get an even better probability-adjusted risk-reward.