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Gold/Mining/Energy : Bema(Bgo) and Arizona Star
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To: Feline who wrote (8065)10/27/1997 7:15:00 PM
From: Lorne Larson   of 10482
 
Feline:

This is an option to aquire an interest in the Aldebaran property. Read the first line of the press release - "the right to acquire" is simply another way of saying option. The payment for the option is cash, the purchase of shares from treasury, and the obligation to proceed with exploration programs and feasibility studies.

This being the case I don't understand your comment that Placer "will get its money back...from cash flow". If Placer doesn't exercise its option to acquire a 51% interest it will lose its payment - as is the case in any option arrangement. If Placer does exercise its option then it has to incur the costs indicated in the press release to earn its 51% interest - there is no money "coming back" to Placer from the consideration paid for the option.

Or are you saying that when the mine is up and running Placer will get its mine construction costs etc back? This is even more absurd - this would mean that Placer will have paid nothing for its interest.

It seems to me that yours is a knee-jerk negative reaction, with no analytical thought whatsover. I will keep this in mind when reading your future posts.

A big question for me is what this does to possible take-over bids, and whether this option arrangement with Placer has to recieve shareholders approval. It initially seemed to me that this arrangement made a take-over bid very unlikely inasmuch as any party taking over BGO and/or AZS would take subject to the option in favor of Placer. I think this explains the negative market reaction. However this deal is in effect a possible sale of a controlling interest in BGO and AZS. It would seem to me therefore that it must get shareholders approval. This opens a door for a take-over if anyone is interested.
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