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Gold/Mining/Energy : Peruvian Gold Ltd. PVO -- Ignore unavailable to you. Want to Upgrade?

To: Brian Warner who wrote (501)	3/29/1998 10:14:00 PM
From: Robert Dydo	Respond to of 892

According to merger/takeover release majority of their capital will be used to develop Gabriel's properties. I think that would be the ultimate goal. I have written before that I doubt that capital of PVO would allow this. That was before I knew about money in GBU's possession, their warrants, PVO has also 1.75M warrants at huge 5.18 expiring on September 98, fact I forgot that existed. There is a natural desire to think that company of this size 59 to 62 or more millions of shares will menage to gain other form of financial support than market or private placements. Such a financial support would be a debt/credit facility designed specially with mining in mind. This step will be only warranted if production is the goal of operations and further step. No matter how we call it, this takeover is a marriage of convenience. What would be the point for PVO to look for properties at all when their holdings were promising? What would be the point to dilute the company for those particular properties instead of picking some promising grass-root project? These projects must hold a short term production in the future which upscale would require a debt financing. GBU's had a general illness of the market - lack of money. Their properties have what PVO needed and PVO has what those properties require. I have also written that this is a fundamental upset. Frankly what I don't like about this deal was a price PVO is paying for GBU. It seems to me that PVO was in better position to negotiate the deal for their benefit and I have hard time to convince myself that this is the best they could squeeze. Even by lecture of outstanding warrants $12m could buy a 24M shares of Gabriel recently. My opinion about preemptive strike to take Bradstone off the loop was just a food for thought, at least for now. I don't expect see anything fundamentally important surface before April 24. We will see more likely market's position itself to this deal and I think with POG rising the speculation once more will be a factor in this sector. In summary my sole opinion is: Positives Good properties, nothing like that was in PVO's possession ever. Great potential and indication of production maybe in short term(1 year?). $20 to 28 million in working capital if the all warrants will be exercised, well enough to pay for sufficient drilling and feasibility studies. Some of it can be used for preparation of mining operations. Negatives: Large dilution. Deal seems to be costly in current market conditions. Weak performance in Peru putting in question future results of activities in Romania. Despite of good indications, character of Romanian properties is of early stage, requiring large expenditures without certainty of the final stage. Regards Robert