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 : PLAYFAIR MINING - PLY . V -- Ignore unavailable to you. Want to Upgrade?

To: Elizabeth Andrews who wrote (222)	7/20/2001 10:36:04 AM
From: russet	Respond to of 505

To be sure they have several options. They could convince a major to take down a PP at a higher price than current market prices to give them the money to drill and do some downhole geophysics in the hopes of better isolating the anomaly. Such PP's are quite popular now, and minimize dilution, yet keep the junior in control for the moment. Generally a senior will only do this without including other conditions (like the right to grab 50% of the play after taking down several of these PP's) in a area play that they already have a big interest in,...like Barrick with Tan Range in Tanzania. They could get the major to do a JV for a share in the spoils,...this seems to be a major sticking point at present because the majors will not want to limit their project risk to just one zone, they want the whole project. This is reasonable because projects of this nature demand large tonnages to warrant investment in processing facilities,...otherwise the only major that could be interested would be one with existing processing facilities nearby. If tonnage turns out to be small, only a major with processing facilities nearby would be interested, if anyone. They could do a JV with a junior, but I don't think that puts us any further ahead, unless that junior could commit a lot of dollars we don't have for exploration? But then we give away a share of the project and still have to eventually do a deal with a major. They could do a PP and go it alone for now. This would not be so great for us small investors, unless the insiders in this project took down the PP themselves without selling off much of their existing holdings (which are not that substantial) showing their confidence in the project. Even then, it is clear no one has a clue about tonnage so no one should be that confident. Then there are the financing options, but generally the folks financing want a fairly advanced resource to risk their cash on,...and such deals generally give away the farm to get some cashflow. Too soon for this yet. The major, like some of us, may think this play could be better than most at proving economic because of current results indicating a large area of bedrock may be involved, and history of the region, so they may want a deal that ensures if they spend the money, they can get controlling interest of the spoils,...all the spoils,...because as I said before, if a deposit is found, it is all about tonnage. So right now we play the negotiating game with a senior producer without any indication of how big the anomaly is. This is blind poker, where no one knows what cards we have. Seniors don't play this game for too long, because they know the odds favor an uneconomic deposit and the chances of the company getting a non-insider PP with present data is low as well. Perhaps our company is argueing about the finer details,...like whether the company car on site will be a donkey or an ass, and what the menu and entertainment expense will be (ggggggggggggggggggggggg).