Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Holmer Gold Mines -- Ignore unavailable to you. Want to Upgrade?

To: Brian MacDonald who wrote (701)	10/6/1999 10:15:00 PM
From: Midas	Read Replies (1) \| Respond to of 739

Hello Brian: Even if Holmer had focused on the Timmins property and defined a resource with a 1 million ounces, they would still face the problem of what to do with the property. Without a couple of mining executives at the top of the company it is unlikely that any bank would loan $100 million to build the mill, develop the mine and operate the facility for 6-12 months before $$$ is received from gold sales. In that case you are back to making a deal with company's that have a gold mill in the Timmins area. I know that the agreement Holmer has with St. Andrews is better than anything I would have been authorized to offer to a junior exploration (non-mining) company. Looking at it another way, a mining company will go ahead with a project if they can make a profit of 15% (or more) over the life of the project. I assume that St. Andrews will use a similar standard. The 0.25 o.p.t. ore is currently worth $115/ton (Canadian). Fifteen percent return on this amount is $15 of which Holmer's share will be $9/ton. This is almost 8% of the gold in the ground and in my opinion a very good deal! As I said before, I know that Holmer would never receive a better offer from an intermediate or major gold mining company and it is unlikely that Holmer could have made more money by running a small gold mine given all the problems that entails. I applaud management's move to try and establish a cash flow. The only way the company can make less than the optimal amount of money with this deal is if the price of gold were to go to $500(US) or more, because St. Andrews will get a bigger slice of a much bigger pie. Just my observations and opinion for what they are worth. Midas