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

To: LoneClone who wrote (62848)	1/13/2009 7:25:26 PM
From: hubris33	Respond to of 78419

Hi LC, I too saw that speculation on AUY taking out SMC before the LRR deal closes. I would have thought AUY would have stepped to the plate sooner, considering SMC's cash need and lower stock price? That said this group [Tagliamonte, Bharti & Humphrey] were around during the DEZ deal with AUY so they know the turf. At one point AUY held 20% of the shares of SMC so I'm sure they are involved in some form or another. The nice thing about the T&C of the deal is that if AUY wanted to step in, there is only a small break fee [$1MM]. The structure of today's PP financing is such that the LRR shares won't be issued unless the merger goes through - so no risk to LRR in the case of a break. Bottom line is that if cash rich producers want to pick up a 1/2 built 80+K opy project for pennies on the dollar SMC is vulnerable right now. The threat of that kind of a buyout should put a base under the SMC share price, but I guess today's selling follows the logic of further dilution. But SMC is only fairly valued for the 40,000 opy production of the Limon Mine. Once the market decides to assign some value for the 80,000 opy Orosi Mine [50% rebuilt] a higher price is in order. Seems like an investment here has little reason for a downside and lots of reasons (production, cash flow, new project, buyout premium] for upside. Also my guess is that Bharti & Company are in the red on their investment in SMC and I know he'd like to swing a deal where they sell the company for a hefty profit like DEZ. So SMC/LRR is fully "cashed up" and ready to restart the construction at Orosi and return drills to the task of turning the higher grade ore into mill feed. Sure looks like upside potential. H3