Takeover Targets in the mining sector Message Board

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Gold/Mining/Energy : Takeover Targets in the mining sector

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To: Claude Cormier who wrote (74)	11/20/2000 9:13:16 PM
From: russwinter	Read Replies (1) of 81

<I am also at loss to explain why great deposits (MFL, BAY, FGX, GBU) remain on the block.> I've tried to ascertain that very question. I have posed it to a few of the usual suspects that we typically mention as buyers. The answer I get from them is that they are very interested but the asking prices are too high and have overly optimistic PM price assumptions, etc.. I don't know if no buyers is really valid here, they just aren't willing to pay a call premium. I know you are close to BAY, what do you think they want for the deposit? I think prices need to be marked down so that the purchaser makes an excellent (not just an average) return. Perhaps we should revive this "takeover" thread for a discussion of how to appraise and properly value various deposits. Some of the analyst reports I've read seem overly simplistic. Today's excellent MFL news and subsequent 2300 shares traded should demonstrate to the deposit holders that the only way real benefits will accrue to long suffering investors in this sector is a final takeout transaction. Of the four you mention I think MFL is the closest to pulling that trigger and it may very well be $7 or so. Going from today's study that would be $20/oz for the 3.8 million oz. That would keep total costs including acquisition and capex to a bit above $200. I think the capex being under 100 million is important so the buyer doesn't "risk the moon". And in keeping with good seller's philosophy it would leave the potential deposit expansion work to the buyer. Maybe that kind of payoff to shareholders will get the attention of the market. Removing a prime deposit like Delores might also shake up other potential buyers.

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