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Recent Warrant Examples

Many times in life the best way to grasp new concepts and ideas is by way of examples, so allow us to present several trades below:

Agnico-Eagle Mines Ltd (AEM)

 Many analysts and newsletter writers have recommended the shares of AEM over the last several years but not one had even mentioned the fact that AEM had warrants trading. The warrants recently expired on November 14th and we would like to show you how much you could have made with the warrants versus the common shares.

Warrant Terms:
Exercise Price:  $19.00 usd
Expiry Date:     14 November 2007

The warrants had been trading for several years (long-term).  For purposes of our example we take you back to June 13, 2006 as our starting point.  Remember, this was the bottom in gold and many shares, and after we had peaked in May 2006.  Our closing price used was October 12, 2007 when we prepared our presentation for the conference.
 

                                          Common              Warrant

     Low Jun 13, 2006        $26.02            $10.86  

     Close  12 Oct, 2007    $54.68             $35.75

     % Gain                       110%              329%

     Leverage                                          3:1

If you had purchased the common shares of AEM as above, you would have made a return of 110% on your investment. BUT, had you instead purchased the warrants you would have made a return of 329% for what is referred to as a leverage of 3 to 1 or 3:1.  The choice was there for all investors to make.

___________________________
 

Desert Sun Mining (DSM)

 Many analysts and newsletter writers had also recommended the shares of Desert Sun over the last several years but again not one had mentioned the fact that DSM had warrants trading. You may recall that Desert Sun was acquired by Yamana Gold last year. We would like to show you how much you could have made with the warrants versus the common shares.  This is not a hypothetical, this is one of my personal trades.

Warrant Terms:
Exercise Price:  C$2.50
Expiry Date:     20 November 2008
 

                               Common                        Warrant

    Price of Common         $1.25     Acq on 09/13/2004   $0.36

          "         "               $6.63    Sold on 07/17/2006   $4.48

   % Gain                         530%                               1244%

   LEVERAGE  = 2.35 times

If you had purchased the common shares of DSM as above, you would have made a return of 530% on your investment.  BUT, had you instead purchased the warrants you would have made a return of 1244% for what is referred to as a leverage of 2.35 to 1 or 2.35:1.  The choice was there for all investors to make.

 ______________________

Breakwater Resources (BWR)

This is another of my personal trades and which no other analyst ever mentioned.

Warrants Terms:
    Exercise Price:        $1.00 CDN
    Expiration Date:     29-Jan-2009

        Common                                   Warrants

Price of common     $0.54             Acq on 11/19/04       $0.19

Price of common     $3.20             Sold on 07/06/07      $2.21

% Gain                    593%                                        1,163%

                                                     Leverage                2:1
                                                  

The question we always encourage investors to ask;

Why would you not purchase the warrants instead of the common shares?  As long as the warrants have adequate time (long-term) remaining before expiration and the current price and leverage looks good, then there is no excuse for not purchasing the warrants.

    ___________________