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Gold/Mining/Energy : Royal Oak-RYO -- Ignore unavailable to you. Want to Upgrade?

To: Michael Bidder who wrote (1031)	6/28/1998 7:04:00 PM
From: Mike G	Read Replies (2) \| Respond to of 1706

Michael - as near as I understand, the money from the smelter pre-payment is going to RYO, and they disseminate where needed. At the same time Ms. Witte said "they still have 2 mines spinning cash" which helps. It is also my understanding that these 2 mines are locked in at $345 per ounce for the next while, so even though they are high cost mines, they are still profitable. This situation from my perspective is nothing like Pegasus. It seems like Pegasus ignored the price of gold, and felt un-touchable. The management of RYO have seen what a crisis situation the gold market is in and have responded accordingly. They are very lean, and mean. I believe the costs of $6.25 per raw ton is accurate, and the Canadian dollar has dropped significantly recently, as low as .67 U.S. It is hovering right around the .68 mark currently, which means the $6.25 Canadian translates to $4.25 U.S., and not $4.59 as you indicated. By the way, this number was referred to twice, once by the chief financial office during his slide presentation, and again by Ms. Witte. When all costs are said and done, the projected cost per ounce of gold is $222 for 1998, and $192 for 1999. Their projections for copper are .76 per pound for 1998, and .80 per pound in 1999. She mentioned that the concentrate is shipped by barge across Williston Lake (which is a large lake created by the Bennet Dam when it was built in 1958) to Mackenzie where it is then put on rail cars. The concentrate is then shipped to the far east for Smelting. They put the smelting costs out to tender, and the lowest bidder is performing the task. Again, tendering the smelting shows what lengths they have gone to in order to reduce costs. There were a few other things mentioned, that I will have to relate by memory. Since the world economies are so low, and our dollar is so low, very soon, we along with several other countries of the world will have a much larger trade surplus with the U.S. This means that the U.S. economy will start to drop. As soon as the U.S. economy drops, usually people run for Gold. I believe someone mentioned on this list, or the Antares list that after the great depression, the gold companies did quite well. I wish I had written down the name of the person who did the study on the Gold Shorting, as I could send you off in that direction. Bloombergs had something to do with it, and it was not only mentioned by Ms. Witte, but also by one elderly gentleman at the meeting. The management of this company are moving slowly, and cautiously, and when they are in solid financial standing, and have the cash to do so, Fiji will be their next target, which will be as big as Kemess. There were some very tough questions asked at this meeting, and Ms. Witte, and the Financial Officers handled them exceptionally well. At the end of the meeting, the room was buzzing with a positive atmosphere. I believe there were also people there from some of the newspapers, possibly including the Northern Miner, as I overheard some of the questions being asked. One person also had a tape recorder, and I wish I had taken one, as I could have done a lot better job reporting what took place. By the way, if the price of gold hits $350 in the next 6 months, Royal Oak will be sky-rocketing. If it hits $400 like gold did 2 years ago - $13.00 per share? Who knows. I thought gold would go up significantly after Bre-x, as that took a supposed 100 million ounces of gold out of the world. Un-productive mines are closing, which has taken more ounces out of the world. The law of supply and demand should drive the prices up soon. Just my thoughts, Mike G