Boris:
The warrants are, at present, a concern. No question. Whether anything will/should be done about it directly, I don't know (ie. extending the date, adjusting the price etc. -- these require board and TSE approval). However, these issues are obviously on the proverbial table and I intend to see that they are brought up before the board.
I can't speak for Barrick, but I'm not sure what you mean by "passive approach" to the Indonesian properties. While they may be pulling back somewhat on their own field efforts -- emphasis on "MAY" -- we are going full bore on our properties. They've made their investment and if we find significant gold, then they would have the choice of taking the COW and paying 100 percent going forward to put it into production, leaving us with a 25 percent carried interest. That is, Yamana is doing a lot of Barrick's exploration work on Kalimantan and we have a couple of very good looking areas where we are concentrating our focus. I'd say the only change in what we are doing today from six months ago is the fact that we are less anxious to talk about it externally.
Again, I don't mean to sidestep anything, including issues concerning PNG. The situation with Union is that we are still interested in getting all of Union's PNG properties but the market would likely not allow us the appropriate financing, particularly based on our previous 20-cent/share offering (C$31 million)at this time. As to a paper transaction, dilution is a major problem for our shareholders and it is extremely difficult to get an Australian valuation of a North American exploration company anywhere near what we have here. (Basically, if you are not producing over there, you are considered "grass roots / pasture" no matter how much drilling you have done, no matter how prospective the ground.)The Australian market is heavily regulated concerning foreign investment. Under their rules and in order for Yamana to meet the appropriate tests for a takeover, we would likely need a better valuation than we could currently get in that climate. Further, the Australian industry has just taken an awful beating with the gold sell-off by the Australian government and the sentiment there is somewhere between very, very cautious and downright fury on the part of the industry, against the government.
As for Union, my recollection is that their shares reached A$00.18 when our offer was being considered in March, then fell briefly last month to A$00.08, before rising last week to A$00.115, roughly where they had been for most of the last year. It seems to me there has got to be some negotiating room in there. However, this takes us back to the earlier issues of capital raising, dilution and valuation. Therefore, our short term intention is to improve the drilling program there -- which, during the initial stages of moving Union from being a tiny producer to becoming an explorer has been awful -- and that is well underway. At the same time, we have a 15 percent interest in the properties and that should reach 30 percent by the end of the year.
I've not recently put out results from there as I had expected to simply because we haven't had anything. However, the equipment is now nearly up to scratch, we are putting in a couple of ex-pats to support / lead the Aussies and the locals , and we are working on faster turnaround for the assay results (currently as much as two months).
Gameta in particular looks very good and Wapolu and Igwageta are also going in the right direction. I've just receiived the aeromag results for the D'Entrecasteaux Islands (Fergusson, Normanby and Goodenough) and they too show several promising areas. Again though, I don't really have enough meat at this time to make a press release. I hope to put one out very soon.
Meanwhile, we are getting some very good results from a few other properties and I look forward to reporting on them in the weeks following the annual meeting.
I hope this clarifies things a bit.
Greg |
