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Gold/Mining/Energy : RED EMERALD RESOURCES -- Ignore unavailable to you. Want to Upgrade?

To: hugh thorne who wrote (125)	8/21/1998 6:51:00 PM
From: hugh thorne	Respond to of 862

An update to the pure asset estimate (#1) which was giving a number significantly higher than the discounted cash flow. I used a gold based discount of roughly 30 cents on the dollar. A few days ago, Tuesday i believe, it was announced that Arakis Oil was being acquired by Talisman. The value was aprox. $2.15 per barrel of proven. This works out to about 10% to 15% of the world price depending on whether you use current delivery prices or futures prices. I would suggest that the political/economic risk of doing business in Sudan may well represent a similar risk level to this project. In this instance though, we have more of a delivery risk as the gemstone is not currently generally recognized by the public. In other words, i would be as likely to throw money at an African project as i would at this project. Applying this discount on the asset value gives you half my previous estimate, that is $45 per share CDN. Now the range is $35 to $45; this being much easier to reconcile than the earlier post.