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Gold/Mining/Energy : Crystallex (KRY) -- Ignore unavailable to you. Want to Upgrade?

To: Gary H who wrote (4480)	1/25/1998 4:23:00 PM
From: Pierre J. LeBel	Read Replies (1) \| Respond to of 10836

To figure out how to calculate the value of gold in the ground, I suggest that you get in touch with Brian Fagan who writes the Fagan Report (US $ 99.00 year). A while back, he issued a report which gives you all the information to make the calculations. Basically, at that time, he was using US $ 25.00 per once when gold was trading at US $ 350.00 or so. I would guess that a value of US $ 20.00 or so would be appropriate in today's environment. You can reach Brian at (360) 267-2905. Have a very nice day. Pierre

To: Gary H who wrote (4480)	1/25/1998 8:18:00 PM
From: Gutman	Read Replies (1) \| Respond to of 10836

Value of gold in the ground is computed by mining anlaysts by the discounted cash flow method. Annual cash flows are computed and each year's cash flow is DISCOUNTED by an market rate of return which reflects the risks of the operation. What return would an investor expect for an investment in Las Cristinas? IMO, at least 10%. Then, the cash flow in year 1 of production is divided by 1.10. The cash flow in year 2 is divided by (1.10)x(1.10), and so on. If production will not begin for 3 years from the present, then the sum of all cash flows must be discounted to the present; i.e., divided by (1.10)x(1.10)x(1.10). The resulting value is then divided by the number of ounces in the deposit to obtain value per ounce. Remember, that there are also negative cash flows resulting from debt amortization payments. It is my personal opinion that the debt amortization payments for Las Cristinas (based on a borrowing of $600 million USD) will exceed the postitive cash flow generated by production of 450,000 oz a year if the gold price remains at $300USD. If the $600 million is financed in part by equity, then amortization payments will be smaller but shares outstanding will be greater. In short, you need to go through a very meticulous financial analysis to arrive at value of "gold in the ground." Hope this helps.