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Gold/Mining/Energy : International Precious Metals (IPMCF)
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To: go4it who wrote (30160)1/24/1998 1:56:00 PM
From: Henry Volquardsen  Read Replies (1) of 35569
 
Charles,

I didn't think your post was foolish and hope I didn't give the appearance that I thought it was. Forward sales is something I know about professionally. Your comment about a forward gold sale for LLL is interesting. I strongly suspect it was part of a financing deal or structured transaction. Forward gold prices should be higher than spot due to the differential between gold lease rates and dollar interst rates. If they sold gold as low as $215 on a forward basis it is highly likely there was an embedded component to the transaction. Can you confirm that price? Also the Beta Vargas is a convential ore and in August they were probably pretty far along in the mine development so I suspect is that what may have happened is that Gerald Metals offered them working capital financing for the final stage of the mine development and arranged for repayment via a forword gold sale at a discounted rate. Just my speculation but I have seen such transactions before. I still think it would be extremely difficult for IPM to be able to negotiate forward sales agreements, even as part of a financing, until they have a succesful production assay and are fairly far along in getting a mining operation up and running.
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