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Gold/Mining/Energy : Precious and Base Metal Investing -- Ignore unavailable to you. Want to Upgrade?

To: tyc:> who wrote (791)	12/9/2001 9:53:46 AM
From: russwinter	Read Replies (3) \| Respond to of 39344

Sort of shows the downside of owning old depleted mines. IR didn't give the details, but I'm assuming this is mostly Troilus? That's why I assigned little value to it in our prior discussion, because of the high cost and depletion. Shouldn't affect future cash flow except that production ends, but it does impact the long term balance sheet as a liability. At least it's honest accounting, and I'm actually getting to be a fan of Inmet. They just need to get moving on new projects, while the cycle is at a low point. There is 35% participation in a Peruvian deposit (Magistral:IP) with their name written on it. They could just trade shares and keep that treasury intact. Two bucks worth per IP share looks about right. Other topic: Prudent Bear Fund junior holdings: 177,000 FGX 800,000 GNG 406,000 MFL 238,000 SWG 1,333,000 SUL 762,000 SRU

To: tyc:> who wrote (791)	12/9/2001 12:01:48 PM
From: Elizabeth Andrews	Read Replies (1) \| Respond to of 39344

This is a little more complex than it looks. I think the nut of the transaction basically frees up cash from short-term investments to cash that IMN can now use. The deductions for reclamation are a pre-tax charge and do not effect free cash flow, as the amount deducted has to be held in a trust account for that purpose. What they have probably done is bought a financial instrument that provides for the yearly reclamation amount and the derivative cost less than the amount carried as a reclamation liability. The difference they can now take into "profit" and use the cash. Most likely, from this perspective it does not change future or free cash flow because they still have to provide for the ongoing reclamation of their producing properties. Unless of course, they bundled those expected costs into the derivative, which they do not tell you and amortized the whole thing at a lower discounted rate of present value than they originally provided for. This could create an accounting "profit". The bottom line is they moved some cash from a trust account (short-term investment as a current asset) to cash (as a current asset) and that amount no longer has any restrictive covenants on it. You won't get clarity on this until the next balance is published.