We must be humble. We are so easily baffled by appearances
And do not realise that these stones are at one with the stars.
It makes no difference to them whether they are high or low,
Mountain peak or ocean floor, palace, or pigsty.
Hugh MacDiarmid, 'On a Raised Beach'
It's over. You need to come to terms with that. If it were 65% or 70%, you'd have a chance in putting up some rearguard action fight. But Kinross has already bagged 80.8% of the total float (As a sidebar, yep it's 80.8%. That's also the way it is. Also, be clear that Kinross will be snagging remnants on the open market). It's now an easy technique for Kinross to reach 90%, and I read just one post on your board that mentioned the technique (I apologize but I can't remember who the poster was or what page it was on or what the title was, either). All Kinross needs to do is use the time-trusted method of dilution. It goes a bit like this, with simplified mathematics:
Company X has 150m shares
Company Y takes over by bagging 80% of those shares (120m shares)
Company X then dilutes 200m shares to raise capex capital, all of which go to company X or friends
Company X now has 320m of 350m shares (over 90% of total float). Compulsory purchase then enacted. Game, set, match. It may not be very pretty, but who said capitalism was?
So from here, I think you have three options:
1) Tender your shares to Kinross. Yes, it means you admit defeat somewhere inside. However it must be said that losing in the stock market is a healthy activity as long as the investor can learn from the experience and apply it to future trades.
2) Hold out. To be honest I see no harm in this, but be clear that holding ARU is for all intents and purposes holding Kinross. Aurelian will now trade in total lockstep with Kinross unless;
a) The Mining Law turns out to be unfavourable to business, in which case both stocks will drop but ARU will drop harder than Kinross (for the record, I think this scenario is very unlikely).
b) Any legal action becomes fruitful to Aurelian shareholders, in which case Aurelian stock will go up compared to Kinross. This brings me to point three.
3) Begin the class action suit you have talked about. I do not know at this point where you stand with this. If you 'go for it' you need to be clear that you are up against a whole ingrained system that may or may not be injust (and in no particular order upset the cozy game played by Canadian companies, brokerages, analysts and the OSC) and will therefore be a tough battle. I'd consider two paths and their consequences right now.
- a) You go for it, start a class action. It either goes to court or it doesn't. If it goes to court you may or may not win. I am not even trying to guess the outcome right now as I have no idea what arguments would be used to prove breach of fiduciary duty. If it doesn't get to court it means you settle at some point with Kinross. This would certainly be an ostensibly better deal than the one on offer, but I'd ballpark guess you'd have to pay maybe a third of the winnings (or maybe even the total payout, which would be worse) to your legal team.
- b) You don't go for it and decide not to prosecute a class action. Fair choice too, but it means admitting defeat. See point 1) above.
I hate this ARU/KGC deal, but i also live in the real world. The most important thing here is to come away from this sorry episode as better investors. If you hold on to the present situation, shake your fist at the world and deny that it's over, the chances of actually learning from this are lowered. Hell, I've learned valuable lessons from all this mess myself. The main one for me, personally, was the absolute reinforcement of the importance of a good management team. As a e-mail friend wrote to me "CTQ would never, never, never have accepted this deal." I'm not putting CTQ mgmt on a pedestal via that comment, I'm just showing that an experienced (and already wealthy) CEO would have been a better person to have at the helm at ARU than greenhorn who has to sell stock to buy a house.
However, if you do learn from all this and you do become a better, more astute, more cynical and an altogether wiser investor, profit missed or money lost this time will be money well spent in the long-term. Basically you'll be better at this game than before. Every cloud etc etc, which sounds cheesy perhaps, but it's also true.
If you didn't enjoy the contents of this post I wouldn't be surprised, but somebody has to tell you. Feel free to kill the messenger if you like. I'll leave you with another block of Hugh MacDiarmid's poem "On a Raised Beach," simply because I'm feeling all philosophical and insular on this Sunday morning. His complete works are available in the Penguin Classics series, if you're interested in "The Geologist's Poet".
What happens to us
Is irrelevant to the world's geology
But what happens to the world's geology
Is not irrelevant to us.
We must reconcile ourselves to the stones,
Not the stones to us..