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Gold/Mining/Energy : Pegasus Gold (PGU) hits 52 week low
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To: Jack Ryan who wrote (35)11/18/1997 5:09:00 PM
From: Dale Schwartzenhauer  Read Replies (1) of 199
 
Since I posted to this thread during better times it's only fair that I "expose" myself again. I'm likely in the minority by saying that I think PGU could survive this debacle. As I compute it, the current market cap. is about $40 million. One of the overlooked assets in all this is the Montana Tunnels complex which can process 15,000 tons per day in a conventional mill. It's very state-of-the-art and thus has a high replacement value. I view Pegasus as a possible takeover candidate, with such companies as Homestake the more likely suitors. One concept you might consider is selling your stock and take the loss; re-position those funds elsewhere depending on your goals and objectives. Then take a look at the May $5 calls, which can be had for around 1/16. They have no leverage from current prices, but if prices can return to the $6-$7 level, you could make $1000 - $2000 for every $100 at risk. I think that's an interesting risk:reward relationship. If the whole thing folds up, at least you withdrew the larger share investment. There's another consideration, more from a technical perspective. The stock gapped lower on heavy volume in what may be described as an exhaustion gap. If so, it terminates the long-term decline. That would make this a buying opportunity. Naturally, you have to make your own choices, but those are my thoughts on the matter.

Good luck, Dale
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