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Gold/Mining/Energy : ARP - V Argentina Gold
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To: easyeric who wrote (2462)2/1/1999 4:38:00 AM
From: E. Charters  Read Replies (3) of 3282
 
I am going to stake the Pacific Ocean and Antarctica. With all that water and ice covering things there is bound to a lot of stuff that people do not expect.

I would say Lundin made a good move with that 2.5 million share cross. Loads of money and that much harder for Barrick to take over. Perhaps it was close?

ARP has spent 40 million US in the El Indio-Maricunga area. One never knows when one will hit it big.

I still think that if Barrick has struck at 8 bucks they might have taken it. But gold fever would have gripped the board, despite the anemic price of metal. Perhaps in retrospect the lowball offer was smart. Obviously to offer fair money for what they have when they are finding more and more is a bit skinflint though. I try to put myself in Barrick's shoes and ask what I would do to get the deposit. If the Lundins wanted 8 bucks would I gamble on getting the whole thing for 150 million CDN? What do I get? I have 50.1 % of the company and 40% of the property. So fairly I have 70% of the gold. Now I can bet that the thing goes to 7 million ounces all told (with the high DDH it may be 6 million already) so that is 4.9 million ounces for 150 million CDN or 105 mill US. So I pay 21.50 dollars US for an ounce. And it can only get better. Plus once I have the company I own the El Indio belt for 30 miles, both sides of the border.

Not a bad deal.

What should we make Barrick Pay? How hard would it be to start the mine ourselves if we were the Lundins? Well it is about 50 to 100 metres to strip and a large scale heap leach operation. It might cost 200 million to start. But lets say it really is 20 million ounces. What is the payoff? 200 million is hard to come by but not impossible. Plus Barrick has to put in its 80,000,000 or walk, that is the deal.

With that guaranteed, or control in lieu of it, then 120 million is ~easy~ to raise. Now if we project 100 dollar an ounce costs then there is 4 billion in profit US. For 20 years that is 200 million per year. (US) If we go to 50 million shares and 50% tax then that is 2 dollars US per share profit. So ten dollar shares US and dividends of 50 cents per share/yr. So if you buy at 5 bucks CDN you would do well.

mailto:echarter@mineletter.com
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