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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: stockman_scott who wrote (21403)	7/1/2003 10:24:00 PM
From: Jim Willie CB	Read Replies (3) \| Respond to of 89467

my takeaway on Newmont (very intriguing chess game) But Yandal promised more than it can actually mine itself, so it must now acquire gold on the open market. This has created the curious situation of a gold company in a gold bull market stuck buying high and selling low until it runs out of money. Newmont can simply walk away from Yandal since it's a legally separate corporation, but this would tarnish Newmont's reputation with hedgers. But what do Schulich and Lassonde care, since they're suddenly so bullish on gold and don't plan to hedge anymore? So Newmont has threatened to abandon Yandal if its offer of just 50 cents on the dollar for all the hedges and junk bonds is refused. The 50-cent figure wasn't pulled out of thin air. In terms of Yandal's gold reserves, it means Newmont will be paying $135 per ounce to the hedgers and bond holders. It costs Newmont $215 per ounce to get the gold out of the ground. Add them together to get Newmont's total cost for keeping Yandal running: $350. If gold falls below this price, Newmont would be better off liquidating the subsidiary. Investors representing 83% of junk bond debt and all but one hedger have accepted the deal. / jim