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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers

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To: E. Charters who wrote (59661)	5/24/2008 5:04:00 PM
From: jackjc	Read Replies (1) of 78424

Back-in problems, yes in general. Most good sized deposits have had majors work them at one time or another. And majors usually keep back-in rights, as eventual deposit size may make it worthwhile. Capex costs have skyrocketed since the back-in terms were set long ago, and so the jr gains much less value for all the expense. An Example is CUU, back-in for 75% is 4X jr expense to complete fease (about 40M tot) or 160M toward capex cost. For the old capex numbers of about 400-600M this would have left 240-440 and 25% = 60-110M for the jr portion to get into prod. But the latest minimum number is 1.4B and so the 160M is only about 11% of the capex. The jr now gets very little for all that work and dilution to raise the 40M. Back-ins should have had a cost escalator in the deal. Inflation strikes again.

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