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Gold/Mining/Energy : Gold and Silver Mining Stocks
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To: ralfph who wrote (948)5/8/2001 8:31:58 AM
From: russwinter  Read Replies (3) of 4051
 
I understand Turkey to be bureaucratic but not necessarily anti-mining. They have a western mining law and there are a number of operations in the country including a state owned silver mine 100 kg from Kisladag that uses cyanide processing. They are sensitive about cultural and historic sites and you need to have local support to mine there. That was NDY's problem. ELD faces none of those negatives and the locals are anxious for jobs.

ELD's operating mines are so so and they do have a bank imposed hedge book and a small amount of debt (US 20 million, minus 7 million working cap). When I spoke with management they clearly indicated that they would be delivering into the book and not rolling over. They are philosophically not hedgers. My primary interest in ELD is the absurd valuation. Accounting for debt and working capital, and adding mkt cap gives an enterprise value of only US 35 million for the operating mines and a very sizeable (8 million so far with a 12 million target) low cost deposit, and that's just far too low.

One challenge for ELD is the 36% stake held by Goldfields, who has been a rather disinterested shareholder (inherited the stock in an earlier acquisition). Ideally ELD would like to be carried into production using the "Iamgold model", and with AU as the partner (like their deal in Brazil).
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