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Gold/Mining/Energy : International Tournigan(ITG.V)announces major discovery -- Ignore unavailable to you. Want to Upgrade?

To: Chuca Marsh who wrote (241)	4/6/1998 4:09:00 PM
From: MWS	Respond to of 347

The cost for the feasibility study is about $3M US not $11.2M US. Your math is incorrect. If you read the release carefully and not just add up the numbers in it you will get an idea of the actual cost outlay. It seems you added just about every number in the release without regard to the conditions under which these amounts are to be paid. To recap (properly): 1. The cost of the feasibility study is estimated at ~ $3M US. This is to be financed in ONE of two ways: i) by raising through a financing at least US$2,250,000 in equity. or ii) by paying $140K US /month for 16 months, that's $2.24M US - the same amount as in i). Only one of the above methods of financing will be required to meet most of the $3M US cost stated in 1. above. You added all three of these numbers to get $7.5M US. This is your first mistake. In other words, your amounts in your list numbered 3,4 and (I assume) 6 (I can't find any reference to a $2.5M Cdn payment) are all the same payment, just different modes of payment - you don't sum them. Considered the equity issue: 2. 8M shares are to be issued to Fossores or Kappes, Cassiday and Assoc. (KCA) With 16.5M OS this takes the total outstanding to 25M and gives KCA 8/24.5 or a 33% stake in the company. Now your item 5, the cash payment of 1.10 a share up to 2.0M shares is an option, not a payment requirement. And it is an option favourable to ITC and the shareholders in that it allows ITC to reduce the dilution from the 8M shares to 6M shares in lieu of a cash payment to KCA. This is not a required cost for the deal and would only be exercised by ITG (my assumption) if they had sufficient cash available and their was concern about this amount of dilution. As it is an option, it is incorrect to add this amount into the required cost for the deal. The warrants you mention (number 2 in your list) don't add any cost ( in fact, if exercised, add money to the company coffers) but do increase dilution. This favours KCA as it helps them to maintain a equity stake at the marginal 25% level should ITC seek further financings. This is not an automatic 2M warrants, but are linked to the number of shares over 24M. For example, should another 2M shares be added to the total OS in a future financing, KCA will receive 500K warrants at 1.10. In summary, the cost of the feasibility is at the $3M US level, not the incorrectly derived $11.2M figure that you reported.