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Gold/Mining/Energy : Naxos Resources (NAXOF)
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To: Jan A. Van Hummel who wrote (4400)10/7/1997 1:16:00 PM
From: Doug Meetmer   of 20681
 
I guess it really isn't a question of price/share but more an issue
of market capitalization. Currently, Naxos has a market cap somewhere in the neighborhood of $150 - $175 million. What
we are asking is, "if the BD COC hole is great, will the market cap be worth $275 million?"

I think it is pointless to attempt to try to guess based upon what we know. There is no good model for this because we are dealing
with nonstandard ore and novel assays/recovery methods.

We can say with confidence that if many, many COC drill holes existed and they all showed gold and we had a pilot plant operating at 200 TPD showing economic gold recovery, then the market cap would be in excess of a billion dollars-depending upon the estimated size of the reserves. Naturally, if people thought the reserves were worth $25 billion then the market cap would be well over a billion bucks.

This illustrates the importance of a good drill program; to adequately define the reserves and to minimize risk to shareholders and potential partners (the majors).

I think that $150 million is a perfectly reasonable market cap for a company that mainly has made a lot of irreproducible claims and perhaps , this year only, has demonstrated some more believable data from a VERY LIMITED number of holes.

Doug
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