written by reader Future Equinox deal

By jbnaples, November 20, 2017

I’d like to have some exposure to the upcoming (EQX.V) deal so my question is what’s the best way to do this ahead of the deal.
I can’t buy on the Canada Ventures through my Scottrade account.
If I was to invest in TREK (LWLCF) would those shares automatically turn into EQX when they are acquired and if so how would that work out if EQX isn’t listed in the US on the OTC or pinks. Any suggestions on how to navigate this would be helpful.
I will admit that I tried Interactive Brokers for a while but it was a bit intimidating for an armature investor like myself.
I have some other small miners I like but I can’t buy them through my Scottrade acct. or they are so illiquid I’d have trouble selling them when that time comes.
Are there other brokers who will give me opportunity to buy on the Canadian exchange especially the Ventures? Thank you for any thoughts and your help.JB

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Travis Johnson, Stock Gumshoe
November 27, 2017 8:45 am

Owning any of the three stocks that will combine to create Equinox will leave you with Equinox shares in the end, or you can just buy them on the open market once the deal is closed (expected to be in the next few weeks sometime, I don’t remember the date). That includes either TREK.V or LWLCF if you want to own the largest participant in the deal, but the price of the three stocks will vary slightly so on some days it may be cheaper to buy NewCastle Gold (NCA.TO, CTMQF) or Anfield Gold (ANF.V).

Trek Mining is the most liquid of those, so it’s most likely to be easy to buy OTC at a fair price in the US… but your sentence ” I can’t buy them through my Scottrade acct. or they are so illiquid I’d have trouble selling them when that time comes” applies to all of these… if gold happens to crater in price and everyone tries to sell junior miners at once, it will be tough to get a fair price anywhere — but doubly so for the OTC shares. It is pretty much always harder to sell OTC stocks at a fair price than it is to buy them.

To determine which shares are cheapest on a relative basis, you can just do the math using the terms of the deal, which are described in the press release here:

“Under the terms of the Agreement, Trek Mining will acquire all outstanding shares of NewCastle and Anfield at a share exchange ratio of 0.873 Trek Mining shares for each NewCastle share (the “NewCastle Exchange
Ratio”) and 0.407 Trek Mining shares for each Anfield share (the “Anfield Exchange Ratio”). Each NewCastle and Anfield warrant and option will become exercisable for Trek Mining common shares, as adjusted in
accordance with the appropriate Exchange Ratio. Based on the applicable Exchange Ratios, upon completion of the Arrangement, former Trek Mining shareholders will own 44% of Equinox Gold, former NewCastle shareholders will own 44% and former Anfield shareholders will own 12%.”

(https://www.trekmining.com/assets/pdf/News/Trek/2017/20171025-Trek-PR-ProjectSun.pdf)

So if it’s a stock you’re determined to hold for a while, and you’re convinced the deal will go through (as I am), then you’ll end up with Equinox shares by owning any of these — the only question is which is cheapest to buy… Trek’s current price X 0.873 should equal NewCastle’s current price, and if not then one of them is “discounted” slightly, etc.

Being discounted doesn’t mean the shares will go up, of course, but it should be relatively better — buying the discounted end of the merger will give you slightly cheaper access to the same stock than buying the premium priced end.

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