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Gold/Mining/Energy : Vista Gold (VGZ)
VGZ 1.730-2.8%10:23 AM EST
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To: virginijus poshkus who wrote (145)1/16/1998 6:45:00 PM
From: PaulM  Read Replies (1) of 379
 
Actually, I spoke to the co. today and am satisfied with what they have done.

I wasn't aware earlier that the company was in need of cash, which was depleted by 1997 exploration costs. What you see on the co.'s balance sheet are lots of "current assets" in the form of inventoried gold. Although that gold is mined, we still have to incur the cost of
"leaching" (I'm no expert) to get it to market. The hedging 90000 ounces at $282 is so that they can assure that this inventoried gold is conveterted into a suffcient level of cash.

Suspension of some activities at Hycroft generates more cash. And the unwinding of their 200000 ounces hedging at the $280 price generated another $9.5 mill cash.

They intend to use all this cash primarily to pay off all long term debt this year. Also, the suspension allows the gold in the ground to be preserved rather than waste it at a time its uneconomic. Basically, they're assuring the survival of the co. but giving up the up side in gold price this year.

They are ready to start up Hycroft again and get financign for the S. American project if gold rises.

And again, overall, their hedge position has been reduced from 200000 to 90000 ounces, or less than a year's production.
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