I posted this on SH (from Casey)

(WITH PERMISSION FROM A SH FRIEND!)

Premium is financing, which has the share price under pressure – and may well put it under more pressure in the near future. The private placement units are at 15 cents. They come with a half-warrant, and we'd prefer a whole warrant, but they are exercisable at 25 cents for 24 months. Best of all, the offering is via short-form prospectus, which means that the shares are basically free trading right away – there are hoops to jump through, but no four- or twelve-month hold period. That makes the warrants a free option on the upside, one worth taking.

I'd anticipate that some investors participating in the PP will sell their shares immediately and hold on to the warrants for a free shot at the upside. That could create a buying opportunity on the open market; if these shares get beat up enough, it would be easy to see 100% gains on news likely ahead. Specifically, the company's step-out drilling from their million-ounce Friday-Petsite gold deposit will result in a much larger resource estimate, when that calculation is updated this year, and the drilling in 2011 has also lined up some great drill targets that could lead to more new discoveries.

As existing shareholders, we're not very happy about the dilution private placements like this bring to us, but if we can either participate in the placement or use the possible ensuing downdraft for a chance to buy at silly prices, that's a speculation we're willing to have a go at.

excerpts from Casey Research