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Strategies & Market Trends : Ride the Tiger with CD

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To: Claude Cormier who wrote (60208)	8/30/2006 9:39:53 PM
From: Taikun	Read Replies (1) of 312930

Assuming the end game is 65:35, or almost double the ounces to be owned by BUF, wouldn't the financing costs be less than the value of the addl ounces? If 3m oz then BUF owns 900,000 more oz than MMR. Say you value those ounces at $30 thats $27m There is a possibility there's 5m oz, so BUF could have 1.5m oz more, or $45m. Probably most will use 4m oz or $36m PFS+BFS+$1m should be < $27m, and for $36m they should almost be able to build a mine That gets them to 65% Do you think they have to spend more than $27 or $36m to earn their 65% interest in aggregate? How much would the BFS+PFS cost? Add in the $1m and divide by the addl ounces (900k oz virtually guaranteed, or 1.2m oz probable or 1.5m possible) and I would think those incremental ounces look cheap. What shareholder wouldnt want addl ounces that cheap? In that case, dilution and financing would be welcome, no? madisonminerals.com Assuming this $15m buys addl interest in 1.2m oz thats still cheap. I agree the $1.75 financing looks cheap but haven't we gotten used to this from these juniors? I think BUF will have the upper hand in Mt Kale after doing the heavy lifting in the project and this value will ultimately lend itself to other projects. I've seen this before where the asset owner who supposedly gets a free ride has a lower valuation than the company doing all the work. Thats because the experience makes the company too, not just the ounces.

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