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Gold/Mining/Energy : Kensington Resources

KRT 25.85

+0.9%

Feb 6 9:30 AM EST

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To: mf160 who wrote (3930)	3/23/1997 12:11:00 PM
From: I_C_Deadpeople	of 5597

A quick note on discounting. Discounting cash flows became really popular in the 70's when inflation was 10% and interest rates were as high as 19% ( in Canada). Given today's general global economics of near zero inflation and super low interest rates, you simply would not discount 10 years of cash flow to " 10% of the toatl cash flow ". Flour has certainly made detailed calculations to come up with this 23m figure AND the calculations were based on some assumptions. As the news release gave no details on these two areas we need to see the detailed repoert in order to critique it!! Secondly,if the upfront costs to upgrade the mines is done with a pp of new shares then you can eliminate the time value of money for that cost. The time value of money would only be relevant if KRT paid for the upgrade through a debt issue that had an interest rate tied to it. Common shares carry no "built in return" so there is no time value to them. We need to see the detailed calculations in order to determine our own estimate of " value ".

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