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Gold/Mining/Energy : Bema(Bgo) and Arizona Star -- Ignore unavailable to you. Want to Upgrade?

To: Terry Swift who wrote (8121)	10/29/1997 2:32:00 PM
From: Goldberry	Respond to of 10482

Terry just what would have been wrong with sitting still and waiting for gold to go back up? They would have been able to make a better deal than the give away of the century. Placer has paid virtually nothing to lock up an option on this companies deposit estimated at not less than 20 Million oz gold and 5 Billion lbs copper and gets to drill some holes in a promising area guaranteed of a 51% interest for the cost of drilling without having to pay for the find. The cost of this option is about 60 million. If the price of gold does go up and they build a mine they put in another $200 Million. So if they don't prove up any more reserves from the existing position very unlikely they are paying a future price of $260 million or about $26.00 oz and getting the copper free. The best part of all is that they get to be the mine manager and you can be sure they will quickly recoup their investment from this source of income. The key though is Placer now has Johnson where they want him and will start to dictate what they want. My guess is that they will not spend a nickle on the feasability study unless they can see gold trending back up. I am sure there are plenty of outs in the deal which will mean they actually got the option for $20 million. I consider the $15 million cost of exploration drilling as being an aside as they would have spent this on some of their own properties. If it turns out that the $200 million in project capital is repaid to them from cash flow then it is a bigger steal than anyone realizes So if I was Johnston here is what I would have done. Discontinue all activity relative to the projects on hand and concerved my cash position. If gold goes back up then look for a deal. If gold stays at the current level no feasability study will warrant mining such a low grade deposit with such high start up costs as this one. Graham