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

To: marcos who wrote (236)	8/28/2001 7:20:21 PM
From: russwinter	Read Replies (1) \| Respond to of 260

I've spotted an important aspect of the RC situation players should be aware of. Despite what you will read in the last paragraph, I picked up 105,000 at 8.5 today, averaging down on my 57,000 @ 36 prior cost (gag). My thesis is that the underlying asset, VR as a permitted, fairly low cost mine is worth much of than the enterprise value @ 9 (57.3 million X 9= 5.15 Canadian X 65 cents conversion= US 3.35 million plus all negative working capital and long term debt at 6/30/01 of US 7.0. Add 7.0 to 3.35 to get EV, which is US 10.35 million. Debate me, but that's not much more than construction cost of VR plant, and values the deposit itself, and the Marathon situation at zero. This is a classic stub, and should attract some interest, either a raid, or force management (only own 610,000 shares that I could count) to capitalize on the asset. What's especially ironic is that a small player with US 500K could pick away at these sub-10 prices coming to market and get 15% interest, which would exercise major control given mgt's position. They could dictate a sale of all, or part of the company's assets, and force a rerating to much higher stock prices. Say sell half of VR to a corporate partner for (US 20 million) and you can see that this situation gets rerated in a flash. I'd love good feedback on a valuation for VR? Or Marathon? That's the important element of this play. As you will see the RC warrant is somewhat toxic: RC has arranged certain "B" warrants. They look very dilutive to me. As can be viewed on page 26 of the annual report, available on Sedar, RC can acquire $825K in stock at a price equal to the market price of the common shares from Oct.1-Oct.10, 2001. At a dime, that's 8.25 million shares, nearly 15% of the active float. 15% ownership of GEO is highway robbery for a reduction in the sinking fund of a mere $825K (Canadian). Fortunately, the amounts involved are manageable, but it's only two months away, and they need to get the stock price up a lot. Only one way (the corporate deal) I can think of, but the mechanical problems may not be fixed. If not, may mean a haircut somewhere. What's their plan? Just hoping the analysts recommend the stock and investors rush back? I don't think so.