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Strategies & Market Trends : The Ego Forum

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From: hubris33	5/24/2008 8:18:26 PM
	of 12175

Hi valutrader, I don't recall giving VGZ the thumbs up. Is my memory getting bad? I bought and sold VGZ way back when there was the spin off of the Nevada properties to ANV/Carl Pescio. VGZ seems to get a lot of attention because the total number of ounces of gold on their numerous properties are HIGH [10 MM oz]. I think speculators played VGZ like it was a gold vault. Going forward, that permit issue is significant and how it gets resolved will be key to the future of the Paredones Amarillos Project. Heading off to high level guys to quash the actions by the local regulators might get the permit reinstated but they will make enemies in the long run and imho one doesn't want local environmental regulators pizzed off at you. If they get stuck having to "update" the permit it could effect the time schedule. Also it looks like the FS called for a cost of $161 MM to build the plant - that should escalate by 15% to 20% as all mine projects are doing; costs could be as high as $195 MM when all is said and done. I see they have $80 MM in assets, so I wonder if another LARGE financing is coming at some point? More dilution? Of course, development of the other projects is another concern as those will need cash too. After watching VGZ do little during the first 3 years of the Golden Bull I'm interested to see them moving fast on these projects. Are the managers well versed in mine start ups? I've gotten a bit skeptical on start up mine projects as it is pretty clear that the market ignores them until after production starts up and only after the company demonstrates profitability. See what happened to GRS when they had start up issues? AZK has never been fully valued and they have at least a couple of quarters of "on target" production and profits. That said, for a LT play I still like SMC with its development project at Orosi for an 80,000 opy mine. I think this is district wide geology and the potential for much higher head grades and higher out put. Also the company is on an M&A mission from last reports: I'm looking for a deal with another Bharti owned company. Just a few things to think about. H3

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