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Gold/Mining/Energy : ARP - V Argentina Gold -- Ignore unavailable to you. Want to Upgrade?

To: Famularo who wrote (1367)	11/25/1998 5:53:00 PM
From: Greywolf	Read Replies (1) \| Respond to of 3282

Research Capital says buy After holding up the release of its first "batch" of drill results in order to include hole 90, Argentina Gold released assay results for five more reverse circulation (RC) drill holes this morning. Not surprisingly, hole 90's splashy gold grade over significant width has reinvigorated the market's enthusiasm for this stock. If one takes the uncut gold assays provided at face value, you could arrive at a current implied value of approximately $2.20 for ARP shares. However, we still recommend exercising extreme caution as none of the reverse circulation drill results on the property, let alone those for this high-grade material, have been confirmed by diamond core drilling RESULTS The results for hole 90 should be read as 10.25 g/t (0.30 ounce per ton) gold over 147 metres. The longer intercept of 6.15 g/t (0.18 ounce per ton) gold over 255 metres has much higher grade unrealistically blended over subore grade material. Furthermore, a) the 10.25 g/t material should ultimately be cut back as high-grade gold is erratic and unpredictable; and, b) grades for this high-grade coarse gold in a reverse circulation hole will not be accepted at face value until diamond core drilling has reproduced and confirmed them. The fact that holes 86 and 88 returned low-grade mineralization supports our previous observation that none of the holes drilled within the resistivity anomaly have returned economically significant mineralization. Instead, all significant mineralization has been returned from holes that test the edge of the resistivity anomaly. The fact that hole 87 returned only a narrow, low-grade intercept is very disappointing. This hole and hole 81 limit the Amable zone's strike extent to a maximum of 800 metres. Hole 89 returned a potentially economic intercept of 1.88 g/t (0.05 ounce per ton) gold and 53.5 g/t (1.56 ounces per ton) silver over 81.0 metres. While this is encouraging in that it extends the mineralization in hole 84 approximately 75 metres to the east, it implies that mineralization in the zone is erratic as hole 88, which cut the space only 40 metres to the south and, did not intersect any mineralization of significance. DISCUSSION Being in close proximity to hole 80, hole 90 is likely testing the same "sweet spot" suggested by the much higher than property average grades in hole 80. Given this fact, we emphasize that one small area of higher grade does not make an economic deposit in a remote area like the Andes. While we believe in the longer term, bigger picture potential on the Veladero property, we feel that once again the market is not seeing the forest for the trees (holes 80 and 90). VALUATION In our last Morning Comment of Nov. 16 we said that we believe that Argentina Gold should be worth approximately $1.60 If one were to give full credit for the uncut 10.25 g/t gold interval in hole 90, and excluding the contribution of silver, we could see a new current valuation in the $2.20 range. However, we remain very cautious because of the total lack of diamond drilling on this property. CONCLUSION AND INVESTMENT OPINION With our revised valuation that suggests that Argentina Gold could be worth approximately $2 20, we are sticking with our accumulate recommendation and a 52-week target price of $3.00. This target price will not be modified until diamond drilling has confirmed gold grades, geological interpretation or that unidirectional drilling is okay.

To: Famularo who wrote (1367)	11/25/1998 11:04:00 PM
From: John Fairchild	Read Replies (2) \| Respond to of 3282

Good move Frank. This is definitely an exciting play. I initially felt that the price had got way ahead of itself with target prices of $4 being quoted after hole 80 was reported. The results from hole 90 just blew me away and now analyst seem to be reporting negative aspects. They don't trust the results from RC drilling and are disappointment with results on the southern edge. Holes 77 and 78 drilled last year 600 meters south of 76 came up empty so results from 87 should not have been completely unexpected. All plays have speculation but the valuation you can find on juniors that have not made a discovery yet does not compare in my mind to the current valuation placed on the potential that exists on Veladero. It is definitely speculation as to what they will find as they step out to the east on the Amable target but the trend looks encouraging from holes 85, 80 and 90. We have been hearing that ARP is only drilling step out holes for the market. But as you can see from the NR below that was always their plan. Why do very widely spaced exploratory holes when these long medium to high grade step outs are adding major numbers to the resource and delineating the ore body. They were following the plan as described in the Aug 12/98 NR. That plan has now been altered. The 6,000 m RC drilling was suppose to be all on the Amable target with 2,000 m of DD holes on Filo Federico. Also at the AGM on Nov 12 Lundin stated they did not plan to put a second drill rig on the property before Jan. Now they are drilling hole 91 in the eastern sector of Filo Federico and the 2,000 m drilling program is expected to start in Dec. I am wondering why they are exploratory drilling a Filo Federico right now? I suspect they are testing their new model on Filo Federico. Wouldn't that surprise the market if they hit some higher grade near surface in hole 91 which as of Nov 23 was at 340 meters. ====================================================== Aug 12/98 5. The intersection obtained in drillhole #76 should be followed up aggressively, with relatively closely spaced drill holes. An initial (October, 1998 - February, 1999) reverse circulation program of approximately 8,300 to 8,500 metres. This program shall commence at the Amable Target around Hole 76 where between 5,000 to 6,000 metres are to be drilled. •A diamond drilling program at Filo Federico of approximately 2,000 metres in two sections of the deposit to further delineate higher grade regions that have been intersected by drilling. The objective is check the gold/silver grades. Possible losses of fines from reverse circulation drilling need to checked as well as further investigate the geology and metallurgy of the target. ====================================================== From July 12/98 NR 2. The substantial growth of mineralized targets. The SE Target, renamed Amable Target, (tested in Hole 76) and a newly discovered area of resistors referred to as the Muneco Target combined with mineralized targets proven up in previous drilling seasons (Breccia Agostina - 95/96 and NW Target - 96/97) point to a very large epithermal system with gold/silver mineralization identified on sites distanced as far apart as 3 kilometres. The mineralized interval encountered at the SE (Amable) Target (193 metres of 1.49 gold) is consistent in terms of width and depth with the mineralized intervals found at Filo Federico 2.5 kilometres away. The overall size of the system exceeds 12 square kilometres. The initial drilling performed at the SE (Amable) Target, which is adjacent to the Cerro Pelado Target (as yet untested by drilling), favours the hypothesis that the Cerro Pelado target has a similar geological setting as the Filo Federico system and may host similar mineralization under its same "blanket" of steam heated alteration and that eventually Filo Federico and Cerro Pelado could prove to be a single, large mineralized system. ====================================================== An exciting play to say the least. Good luck on this one Frank. John