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Gold/Mining/Energy : Francisco Gold - FGX.V -- Ignore unavailable to you. Want to Upgrade?

To: Nexus who wrote (791)	5/8/2000 5:44:00 PM
From: Claude Cormier	Read Replies (1) \| Respond to of 1907

Nexus, Obviously FGX needs a catalyst. But this doesn't mean it can't be undervalued. I am sure we agree that the fair value of a company is what you would get if you liquidate all assets and distribute the cash to shareholders. We probably also agree that some stocks trade at a discount to their asset value, others at a premium. The premium value is due to expectations (or lack of) created by both the media and the management of a company. The premium can go from negative to positive depending on several factors. If a company claims they have a property that has probably 7-10 millions ounces of gold, this creates high expectations and a large premium. If another company has a deposit worth $10-$12 a share, but says they are not selling it below $15, this creates doubts in the market, low expectations that a deal can be done and follows a total absence of interest for the stock. Basically, the market price of a stock rarely represent its true value. It is the premium that fluctuates with the actions of the companies and the medias until the liquidation date. This actions may or may not affect the assets of the company, so you must constantly re-evaluate thos same assets. I am sure that you have seen in your life as an investor, some stock with a lot of cash in the bank amd no debts, selling at a 40 or 50% discount to their cash value. Where these stocks undervalued ? Sure! And that was because expectations were extremely low that management would do something with the cash. In most case the market was simply wrong and impatient. To make my point, I am sure you don't think that someone would pay C$100 millions for Luchio at this stage of the game. But someone would pay C$120 millions for El Sauzal if it was for sale at that price.