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Gold/Mining/Energy : Diamonds in Alberta, Ashton, Pure Gold, Montello, New Cla -- Ignore unavailable to you. Want to Upgrade?

To: ddl who wrote (499)	3/7/1998 11:32:00 PM
From: John Fairchild	Read Replies (2) \| Respond to of 822

To move the stock IMO. A post amalgamation NR made a comparison between PUG and ACA share price valuation some months ago. Obviously the company was disappointed that PUG was not trading higher in relation to ACA. Many investors see this gap as well but it has obviously not narrowed. I think this NR provides some attraction to gain some cheap shares and the warrants are very attractive. The people who are waiting to position themselves in the JV may move in now and hopefully drive the stock up a bit in closer relativity with ACA. At the same time some people who are already fully invested already will have to sell some shares to pay for the rights. The next eight days will provide the transition for repositioning with hopefully some upward pressure on the stock. Obviously the danger is after the rights are exercise and the stock is higher then some profit taking may occur but possibly we will have some more news out on new pipes and the profit taking will not drive the price back down. Those are my thoughts. Any more opinions? By my calculations PUG should be trading at 30% of ACA (including the dilution of the rights) which puts PUG at $1.40 with ACA at $4.65. PUG is currently trading at 23% of ACA. My numbers for anyone wishing to check accuracy. Ashton - 26 mil shares and ~ $17 mil cash. market cap $4.65 X 26 = $121 mil. $121 mil - cash value of $17 = $104 reference value of JV properties (where Ashton has 42.5% and PUG has 15% interests). 15%/42.5%=35.3%. PUG has 35.3% in relation to ACA property interest (on these blocks). PUG - 28 mil shares out (following rights not including warrants) and assume $3 mil after the rights are exercised. ACA referenced property value of $104 mil x .35 = $36 mil PUG market cap should be $36 mil property value + $3 mil cash = $39 mil. $39 mil/28 mil shares = $1.40 $1.4/$4.65 (ACA current price) = 30% Please don't rely on these numbers as I made some guesses regarding cash positions but they are likely close. One other thing I would like to point out is that everyone knew PUG needed cash especially with the new information about this years JV budget being more like $20 mil. I was afraid we were going to see a private placement. I think the lack of cash and the possibility of a private placement has been to some degree holding down the share price. This rights offering is in my opinion a good solution and will have a positive effect on the stock price. PUG currently trading at 23% of ACA. John