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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers -- Ignore unavailable to you. Want to Upgrade?

To: Anchan who wrote (9083)	4/13/2006 9:58:38 AM
From: Julian Augustus	Read Replies (1) \| Respond to of 78426

I find this puzzling. In early 2005, the company needed $145m to build the mine. Fine. They raised a little over $80m in equity financing (which is when the A warrants were issued) and arranged a $75m debt financing which came with an associated hedge. When MDM went bust in January, they raised in March a little over $70m in new equity financing (issued B warrants). One would think EPM would have enough cash from the equity side alone to build the mine? Why do they need as much as another $70m or more in debt financing, and urgently? And the terms of the toxic debt financing and associated hedges seem stupid beyond belief. The bank is going to lend you $75m, but meanwhile they are holding $20m of your money until they give you the $75m? Is the management just completely incompetent or am I missing something?

To: Anchan who wrote (9083)	4/13/2006 10:04:11 AM
From: alburk	Read Replies (1) \| Respond to of 78426

Look at this section of the press release below. It says total cost to complete $69.6MM. This is substantially covered by the recent offering. Downside risk is losing the debt facility and the related charges, including settling the hedge. However, if they retain the debt facility, they are "cashed up", to the extent that they may not have to tap into it. At least that's my take. I think the $145MM is total cost--including costs that have been incurred. From EPM press release March 31, 2006-- europeanminerals.com <In January 2006, the Company terminated the LSTK that had been entered into with MDM in September, 2005, in relation to the Varvarinskoye Project and it appointed SENET CC ("SENET"), a South African based design, engineering and project management company, to undertake a review (the "SENET Review") to reassess the design and cost of construction of the Varvarinskoye process plant and associated infrastructure. SENET has extensive project and construction experience operating worldwide within the mining industry, including the former Soviet Union, specialising in engineering, procurement and construction management ("EPCM") and engineering, procurement and construction turnkey contracts for multi-disciplined projects. In February 2006, the Company received the SENET Review that included overall design parameters as detailed in the definitive feasibility study undertaken by MDM in November 2004. The total cost estimate for completion of the Varvarinskoye process plant and related infrastructure costs is $60.8 million plus EPCM fees and reimbursable costs payable to SENET of $8.8 million for a total of $69.6 million. This compares to total estimated plant and infrastructure costs of approximately $55.6 million under the LSTK. SENET has also advised that based on the work done to date, it expects to be able to achieve practical completion of the process plant and introduction of first ore by March 30, 2007, with full commissioning of the plant to occur by mid-June 2007. The Company has accepted the revised cost estimates and construction schedule submitted by SENET and signed a letter of intent ("LOI") appointing SENET as EPCM contractors, to supervise construction in conjunction with JSC Consolidated Development Corporation ("CDC") and the Company's own project team. SENET has commenced work under the LOI which will be translated into a formal EPCM contract shortly.>>

To: Anchan who wrote (9083)	4/13/2006 2:28:39 PM
From: LLCF	Respond to of 78426

< But then they might lose those $25 million in hedging arrangements.> Well, presumably the new hedge would make up for all that... ie. the new debt facility will include a higher hedge price, still, I can't believe they are stupid enough to allow the banksters pull the deal and make them cover because a contractor pulled out or a variety of other reasons... just empowering others. Just another example of 'hedge risk' we talked about. I would think that normal banking arrangements would simply include expensive penalties when the loan comes due. Pitty. dAK