Richard Saunders and Jason Kaye et al:
Gentlemen, thanks for your inquiries and my apologies but I have just taken a week off. I was supposed to take two weeks but guilt got the better part of me. (I can tell I was away because the share price fell precipitously... but enough of the tongue-in-cheek.)
Richard, we have about US$18 million in the bank and are "burning" about US$1 million per month, leaving us more than a year in the black ahead. I feel, however, that the market will ease up by the fall and we'll see where we are then.
The annual reports are being packaged and mailed beginning this week. (They look quite good, I believe, and are the best overview I can suggest to anyone on the Company. They are also somewhat technical but anyone who is seriously interested might be able to learn a fair amount about the business.)They are going to people on our database as well as through RM Trust in Canada and their affiliate in the US, to registered shareholders. If anyone not on our database wants a copy, please get back to me. I'd prefer to handle it through the normal channels so please send name, mailing address, telephone and (where you want to receive faxed news releases) your fax number.
As I've said before, we'll be e-mailing press release notices once I can get that organized. I hope to have this in place by year's end.
We are also in the process of posting Yamana's '97 Annual Report on our Web site. That should be finished this week. yamana.com
Richard, I'm attaching Jason's name and response because he has been looking at similar issues which you might find useful and which I'll try to answer.
Jason:
1) As noted above, Yamana still has about US$18 million in the bank (roundly, Cdn$25 million) or a little less than $1 per 27 million shares outstanding. As you noted, we have no debt.
So what should our share price be?
Forget the facts that we have 95+ properties and that drilling has found gold in Papua New Guinea and Santa Cruz, Vanguardia, Argentina or that extensive sampling has shown promising mineral (various) results in Tierra del Fuego (Argentina and Chile), Paraguay, Washington state, the El Indio and Northern Porphyry belts of Chile and that, in the dreaded Indonesia, where we are still very pleased with our field results, chances are looking very good that (I believe I've reflected my biased but reasonably informed optimism here in the past), it looks as if the attempted bullying by certain Indonesian government players has gone away and the Seventh Generation COWs will be passed in August by Parliament and signed by the president before the end of the year.
2) Rio Algom's decision to drop out of the Santa Cruz, Vanguardia earn-in was based on a few factors and I'd like to point to a couple of them:
Rio Algom's experience is with porphyry copper. We are primarily looking for epithermal gold and silver. The systems are dramatically different, the key being that if you drill ten holes in a major porphyry system, keeping them 1 kilometer apart, you will get a flat no or a good maybe. One kilometer spacings for epithermal systems could easy miss several multimillion ounce epithermal systems. While we were very happy with our relations with Rio Algom, our philosophies on this point remained somewhat different. Both of us compromised, which was how were were able to make the finds we did. However, when their "favorite" property turned out not to have a major "hit" within the first few drill holes, they were clearly dissappointed. We have a different view based on a few years of experince and coming from a diffent corporate mindset.
Rio Algom would have had to commit another US$16 million to the project to earn anything. That was, for them, too great a commitment at this time.
Rio Algom is looking to put an ore deposit on their books within a very short period of time. This project could take another few years (it could also take less) before a deposit is deliniated. (One of their own senior people told us that he knew "there will be a mine there" but that it wasn't necessarily the more than three million ounce mine they were looking for in the near term.) We believe there is multimillion ounce potential. It appears bulk-mineable and will likely not be high cost. The latter point refers to the fact that, with a depressed gold price, costs and margins are more critical to mining the stuff than they have been at higher levels.
We are in discussions with a few larger companies but, with the southern winter, access to the site will not be practical before September. The dataroom is being prepared now and, with the results of Rio Algom's US$4 million, we have a lot of data. We may have a new partner by the new season or we may begin the season on our own. We remain very confident about this property.
3) The Northern Porphyry Belt plan is moving ahead and we hope to have completed the preliminary work on our eight properties later this summer and to be interviewing potential j-v partners in the fall. Again, interest has been expressed by a number of senior parties. This is the richest copper zone in the world, where about 20 percent of all of the copper currently being mined is coming from. And now others are starting to use some of the techniques which have drawn us to our targets.
4) Finally, in this business, our share price will rise with the finding of a significant, proven deposit. That will generate one or more of the following: a) cash flow; b)cash from the sale of that property; and/or c) a takeover bid by a major. In order to make such a find, we need highly prospective properties -- which we have, in several of the richest areas of the world --, we need cash -- which we have -- we need to explore -- which we are -- especially, we need to drill -- which we are at the moment in PNG, Washington state and which we will be doing over the next few months in Paraguay and, I believe, over the next six months in the Northern Porphyry Belt, Santa Cruz, Vanguardia and, perhaps, the El Indio Belt.
We also need to maintain our credibility and to communicate what we have and are doing. I'm trying.
5) As a reminder, the annual meeting is in Toronto August 15 at the Design Exchange on Bay Street for anyone able to attend. I expect it will be interesting because so many people have seen their shares fall since Bre-X and they are upset. Now, with Rio Algom's decision, the shares have fallen more. Painfull but understandable. I'd just point out what I've said before in this area: since March, good news has gotten either scant response or even a thumbs down (perhaps, the idea is to keep you head in the gopher hole rather than chance getting it shot off?) while bad news gets the hammer. I hope there are no new hammers on the horizen and look forward to the time when the good news gets the type of positive response it has in the past. (Question: Where would Yamana's share price be without Bre-X's crash? I know the point hardly matters but the world will keep turning and we will keep working and for those who hang on and for those able to average down at every hot buying opportunity, the chances of reward are very, very promising.)
FYI, I'll be around for the next week and a half. I'm scheduled to go to a conference in Vancouver on July 23/24 before going direct (24th) to PNG and Australia for about two weeks. I am rarely able to check my e-mail on that sort of trip. If you need something more urgently, please contact my associate, Amy Martin.
Thanks for your interest and patience and I hope this helps.
Greg |
