We would not see the discount as a big issue, though it is a bit larger than average. But any small company typically needs a discount to sell a block of shares. DNG says the proceeds are for 'construction and development of a new ore processing plant in Senegal, prep. work for other plants, and other opportunities in Latin America'. On the assumption that it really will spend $20M, it is likely that management wants to keep its capital structure flexible and maintain a large cash balance even after these expenditures. There is some value in that, especially for a small company with little analyst coverage. So it becomes a question of how much cash is 'enough'. To us, we would see $40M (leftover) cash as a bit too high. But then again, we do not know the company's future long term plans. The stock is also up 56% in a year, so management may have been enticed to sell some shares at a valuation close to its recent highs.
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