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Gold/Mining/Energy : Bema(Bgo) and Arizona Star
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To: Terry Swift who wrote (7902)10/21/1997 8:11:00 PM
From: Ken Benes  Read Replies (1) of 10482
 
Terry:

I would not be that quick to dismiss the assumptions made by NB. In fact those are the very assumptions that have been percolating just below the surface these past several months and is the reason for the stocks decline in price. BGO's management has been aware of this and have choosen to gloss over the problem, particularly the Refugio, and issue rosy prognostications that a deal for CC might be completed by the end of the summer, then moved to October, now possibly by the end of the year.
The reality of current conditions are that in all probability there will not be a deal on Star prior to the end of the year and just possibly there might be some kind of jv for development of the CC limited to funding a full feasability study. This situation will leave BGO in limbo, limiting any further drilling to the Pancho/Verde deposit. An expansion of those deposits will in all probability extend several years into the future. Cash flow will be limited to the profits from the Refugio. Hopefully this will be enough to pay for the exploration of the Pancho/Verde deposit and pay for corporate expenses. The 31 million dollars that BGO has will be safeguarded and used sparingly. It is highly unlikely that BGO will be able to raise additional funds in the near future. I had hoped that a deal for Star would have provided BGo with a large infusion of cash that would have provided a large downpayment for expenses associated with development of the mine at the CC and a resumption of exploration on the three Amigos and the Quebrada. This has not happened and I believe as shareholders, we will be lucky to maintain a price of 4.00 into the future.
At some point, the economics of the CC will improve as the price of gold approaches the 375.00 mark indicated in the prefeasability study, until then BGO will remain as just another resource stock with the interest of the majors focused on lower cost mines that can be developed quickly and cheaply. BGO is entering a prolonged period similar to the one they experienced while they were attempting to develop the Refugio property.
This is unfortunate for us and the investor has to question whether he is willing to wait for the development of the CC in a market that has a lot of risk for an old story.

Ken
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