Christa:
Its really useless to speculate on the merits of someone acquiring BGO and AZS at any given price. The market's valuations of these stock's is totally irrational, in my opinion. One of the reasons is well-stated in your post. The mine cost for CC of US$1.1 to 1.3 billion includes putting in place a huge infrastructure (roads, water, power, etc.) that is not there now. Once in place, this infrastructure will be available for use by the the mine at 3 Amigos, possibly Eva, very possibly the mines on the Quebrada property, and others that will undoubtedly be found as Bema drills its various other targets on the Aldebaran and Quebrada properties. I don't think there's any question Bema will realize economies of scale on the infrastructure put in at CC. I agree with you, if I were negotiating for CC, I would want a piece of the entire property. There's more gold there.
Bema wants a JV partner to develop, build and finance CC but it wants to keep the rest of the Aldebaran property as is; i.e., owned by it and Star. I suspect there is a good reason for that.
Regarding my optimism; its still based on the fundamentals of what BGO/AZS owns and that hasn't changed. It's gotten better, but what's changed is the POG and market sentiment. NB has downgraded Bema and Star but I would urge anyone living in Canada to contact them and get a copy of their report and the assumptions its based on. Their downgrade is based on $320 gold, a US$100 million mine at Pancho with no resulting expansion of production, and a valuation of Refugio at US$.88. You read that right.... Refugio at US$.88. A producing mine, 4 million ozs of proven reserves (Bema's share) and NB values it at $.88. The analyst who made those assumptions is smoking something illegal. They are laughable. If you want to apply such ludicrous assumptions to Barrick or Newmont, you could reduce your target price for them by 50-75% but nobody would be dumb enough to do so. Why NB has made such ludicrous assumptions regarding Bema, only they know. Good luck.
Terry |
