Bema(Bgo) and Arizona Star Message Board

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Gold/Mining/Energy : Bema(Bgo) and Arizona Star

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To: Daytek77 who wrote (555)	10/26/1996 12:13:00 PM
From: Terry Swift	of 10482

Tony: I am mystified as to why BGO would want to increase their holdings in AZS UNLESS they are certain they have or can find a buyer for AZS at prices much higher than these, which I believe they can and will. Looking at Bema/Star's balance sheets it is obvious there is no way Bema/Star can finance a $1 billion mine. The debt they would have to take on would kill them or the stock dilution they would have to do would kill the stock values. Neither scenario is plausible. By far the best route for Bema to take is to find a major that will do a cash buyout of Star and be their JV partner in the CC mine. I put that question to John Anderson, Bema's IR man, and he flat out told me they're looking for a major to buy Star and JV the mine with them. I asked him if they were going to exercise their option to acquire another 2% of Aldebaran; he said that was being left open because it was a factor in negotiating a buyout of Star; i.e., the buyer may only want it if they have 51% and control of the mine. That scenario is, in my opinion, is by far the best for Bema to pursue. It gives them lots of cash to pay for a big part of their share of the CC mine and it spreads the risks inherent in building a $1 billion mine. It makes so much sense and the alternatives could be so disastrous to Bema's stock values I see no other route for Bema to go. Johnson was asked that at the Thursday conference and his response is what you would expect; Bema is looking at all its options and will do what is in the best interests of the stockholders. In the 9/24 conference he flat out stated the article in the Financial Post to that effect was wrong. I'm convinced they're looking for a major to buy Star. If so, there is no reason to increase their ownership of Star unless they are certain the shares will be resold at a nice profit. Johnson's comment is puzzling in light of Bema/Star's future financing requirements. Terry

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