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Gold/Mining/Energy : Corner Bay Silver (BAY.T) -- Ignore unavailable to you. Want to Upgrade?

To: geo in vancouver who wrote (4342)	7/5/2002 12:39:10 PM
From: Claude Cormier	Respond to of 4409

Indeed, the results are not as good as expected, but they are still positive. They explain why the offer was revised downward, I guess. <Yes it appears positive but note that the Financial Review was done at different prices than used in the reserve estimate, $5 versus $4.60 this is unusual in my experience.> Indeed unusual... But still conservative. My guess is that the reserves at $5 would not have been much higher ($5.28 was the number in the pre-feasibility and my guess is that the rest of the silver need $5.50). They probably wanted to establish a solid floor to facilitate financing. <You will also note that a 10% decline in the POS from $5 to 4.50 decreases the IRR to an unattractive 9%. > Yes. But that is on a 100% equity basis. With debt financing, the IRR at $4.50 silver will be very close to the 20% threshold. BTW, diamond drill holes were reported to the public: cornerbay.com Keep in mind that the average of 71% recovery on Zone1 (which is 65% of the ore) ore is inline with pre-feasibility numbers. In conclusion, I think that yes its is good for shareholders that Pan American is taking over. <Otherwise you are looking at a $2 or lower stock> We can argue a long time on this and may never know. I think that $3.50-$4.00 make more sense. Miners with economic project that are being brought to production will sell at much more than NPV. Most often at 1.5-2.0 of NPV and above. In short, Alamo Dorado is still one of the very rare silver projects that can come to production at current silver prices and it is also very leveraged to silver prices. The future will depend on silver prices.