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Gold/Mining/Energy : Pegasus Gold (PGU) hits 52 week low -- Ignore unavailable to you. Want to Upgrade?

To: Gerry Schechter who wrote (44)	11/23/1997 4:26:00 AM
From: Michael Bidder	Read Replies (1) \| Respond to of 199

Be carefull Gerry As you know The gold sold between 400 and 470 represents sales from a Hedge book.Think of it as options to sell gold at a future date at a future price. For the right to do this the company in the past correctly guessed that gold may drop in price and purchased these options. Now they comprise the companies single greatest asset. (The topic of much discussion during a Nov. 19? conference call). Over the past year the company was in the words of the president "eating through the Hedge book" . Basically selling the asset to subsidize money loosing gold mines : Mount Todd , Florida Cannons, Montana Tunnels , and Diamond ..... PGU's hedge book is now worth roughly 70 - 80 million. Less than it was last month and more than it will be next month. Much of this value will be used to cover environmental liabilities. Although I don't feel this will be enough. I am also unsure of weather or not the environment has first right to this money as IR did not know the answer. Sense Pegasus is in default of a 150 million line of credit the company is for all practical purposes in the hands of its creditors. No longer the stockholders. (The stockholders are the last on the rung in the deposition of assets in the event of a Bankruptcy). As long as the company mines gold at prices above the current market price the creditors value will be eroded. Therefor the creditors, mainly banks and bond holders, will seek to minimize cash outflows by shutting down loosing operations. All operations fall into this category. While doing this it is in the interest of the stockholders to maintain shareholder value. Some of the creditors may hold stock, hence it is in there interest to "keep up appearances" while they liquidate there stock holdings. Bear this in mind. It is difficult for the laymen to grasp all the nuances of this quickly. Not so for the Banks and bondholders. They know the score well. Also the large stock holders. Its amateur investors and the discount trader who can be deceived easily into "bottom fishing". I believe this is the reason that investor relations at Pegasus couldn't answer even the most basic questions. management has a reason for keeping investors in the dark. I caution all investors that this stock is sold hard for a reason. Be wary Gerry of promoters of this stock now. There are those who would take innocent money from amature traders for personal gain.

To: Gerry Schechter who wrote (44)	11/24/1997 1:28:00 AM
From: Dale Schwartzenhauer	Respond to of 199

Gerry: I believe those forward sales are part of what is called the hedge portfolio. It does represent some excellent value, but whether it's enough is another matter. I've understood the Montana Tunnels is a very state-of-the-art milling complex, capable of sustained throughput of 15,000 tons per day. A new property under acquisition from Newmont will add 1 million ozs of potential production. I think this could save the company and pave the way for future growth. I became inadvertantly long some calls, so I'm somewhat biased, and I also traded the stock as a broker years ago. But I don't think that is blinding me to the possible recovery versus liquidation threat. Dale