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

To: Claude Cormier who wrote (1020)	10/25/2000 11:37:08 AM
From: russwinter	Read Replies (1) \| Respond to of 1907

My not so wild ass guess about El Sauzal's buyer: Meridian and soon. Listened to MDG's conference call and they are ready to take on another project. Financially in excellent shape with US 52 million cash on 9/30. Generating about 6 million in excess cash per month. El Penon is on a tear, a coupon clipping exercise. Project loan down to 22 million, and margin requirement removed from remaining hedge book. Stated that their interest was Latin America, especially Mexico, Chile and Peru. Also that two million ounces was the ideal deposit size for them (El S is 2.4). Project needed to be in top 10 or 20% cash cost wise (today that would be under $125: see cost chart under slide presentation section. MDG web site): El S is $86. Capex should be affordable, El S is a perfect fit at 58 million. They are using a $300 POG assumption, not 275 like most others. Stated that they are a growth gold, but analysts and shareholders (although happy about the health of the company) questioned how this could so, as the reserves at El Penon are only being replaced given the torrid pace of production there. I think FGX mgt sells El S only, and since they are just getting their teeth into Guat. they stay after that. But, sitting on a cash horde of US125 million wouldn't make sense. So maybe a stock swap merger for El S at 1.3 shares MDG (US) for each FGX share (equiv. to $10 for us), with Guat and FGX's US 23 million treasury remaining. MDG could then preserve their treasury and credit lines to quickly develop El S. FGX holders would get an extra bonus because this deal would IMO rerate both of the new holdings. MDG would be rerated up as a real growth gold keeper, possibly the best in the world (I think people are tired of ABX). Our remaining FGX holding would be rerated because of their clearly recognizable success at explorers.