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Gold/Mining/Energy : American Resources of Deleware (GASS)
GASS 7.835-0.3%10:02 AM EST
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To: tony mendoza who wrote (69)5/6/1997 8:50:00 PM
From: Ed Ajootian   of 172
 
Tony,

Would have liked to see some better numbers but it really isn't all that
bad. With $2.5 mm of EBITDA they have plenty of cash to pay back debt,
so there is no credit probs. Plus I estimate they earned $1.6 mm in cash
flow before working capital changes, which, while much lower than what
I was hoping for, still leaves the stock way undervalued. Based on primary
shares this works out to $.18 per share for the quarter. Now lets just
conservatively assume that even after they get the Ship Shoal platform
fixed the next three quarters are flat to the first. That's still $.74
for the year. This means the stock is selling for less than 3 x cash
flow.

Of course we should figure in the additional shares to get converted
from the remaining convertible bonds. This is a number that I think may
be a pleasant surprise because they said the weighted average shares
out for the whole first quarter were 8.6 mm, whereas the total shares
out as of 3/17 (per the 10KSB) were just 7.6 mm. Yhis means that a mega
amount of shares must have converted in the last few weeks of the
quarter.

My take is that the stock will pop a bit once the MoneyWorld article comes
out.

To summarize, midly disappointing but not the end of the world. Hang
in there.
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