Dolly Varden Silver And Contango Ore - Unlocking Kitsault Valley
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Myriam Alvarez3.05K FollowersFollow5ShareSavePlay(12min)CommentsSummaryContango Ore and Dolly Varden Silver proposed an all-stock merger to form Contango Silver & Gold, which would create a mid-tier silver-gold producer and developer.CTGO contributes its 30% Manh Choh interest and Alaska growth pipeline, while DVS brings the high-grade Kitsault Valley silver-gold district and strong exploration platform.The combined company would have roughly an $812 million market cap, ~$145 million in cash, modest debt, and balanced gold/silver exposure.I estimate their combined annualized cash flow multiples look a bit rich vs. peers but are arguably justified by their combined asset quality and diversification.matejmo/iStock via Getty Images Two precious metal small-cap stocks have turned to M&A to solve a shared problem. Individually, they are either too cash-constrained or too asset-constrained to justify a re-rating. However, combined, they become a credible mid-tier firm in this sector. In my view, this isThis article was written byMyriam Alvarez3.05K FollowersFollowMy name is Myriam Hernandez Alvarez. I received the Electronics and Telecommunication Engineering degree from the Escuela Politecnica Nacional, Quito, Ecuador, the M.Sc. degree in computer science from Ohio University, Athens, OH, USA, a graduate degree in Business Management from Universidad Andina Simon Bolivar, Quito, Ecuador, and the Ph.D. degree in computer applications from the University of Alicante, Spain.Disclosure: I collaborate professionally with Edgar Torres H, who is also an author on Seeking Alpha. Our analyses are conducted independently, and we adhere to Seeking Alpha's Shared Association Guidelines.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Quick InsightsHow does the merger improve the strategic positioning of CTGO and DVS?The merger combines CTGO’s cash-generating gold assets with DVS’s high-grade silver-gold projects, creating a diversified, cash-flow-positive mid-tier producer with enhanced exploration and development potential.What are the key financial metrics for the combined entity post-merger?The merged company would have a market cap of $812 million, $145 million in cash, $35 million in debt, and an annualized cash flow run rate of $40 million, implying an EV/CF of 17.6.What is the primary risk facing investors ahead of the merger vote?The main risk is shareholder approval; if the merger fails, both CTGO and DVS could trade lower as standalone entities due to their current premium valuations.Recommended For You