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Gold/Mining/Energy : Precious and Base Metal Investing
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To: russwinter who wrote (1883)2/18/2002 10:16:52 AM
From: Claude Cormier  Read Replies (2) of 39344
 
<I would define "in the money" as an IRR of 15% at 300 POG>

Russ,

Generally, projects with a 15% IRR are a no-go. Seniors want 20%. They can afford it because they have other projects. I think juniors or mid-tiers with a standalone project would need much more than 20% so they can limit the risks.

I like your MFL example with an IRR above 20% (possibly 25%) at $300 gold based on numbers Nov-2000 economic analysis, Dolores is now in the money for the company. Especially with these new higher silver grades.

However, I don't think that Minefinders could easily finance the project as a junior. I am not sure either that a senior is ready to step in. There is still money to be spent on the resource to bring it to feasibility level. How much I do not know. Your all-in cost of $200 for a senior that would take over is right on!... but will he get a big enough return with gold only at $300. I don't think so. Unless the company proves up that there is clearly a large enough high grade starter pit that will help accelerate cash flows in the clearly years, I think that we might need $325 or $350 for a takeover to happen.

What I would like now is for the company to agressively resume exploration at Dolores? Sitting on it while waiting for a bid or higher gold prices may not be the best approach.
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