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Gold/Mining/Energy : Mongolia Gold Resources -- Ignore unavailable to you. Want to Upgrade?

To: Bearcatbob who wrote (3031)	1/16/1999 9:07:00 AM
From: Pete Schueler	Read Replies (1) \| Respond to of 4066

Bob, I will agree that in the short term its more important to make money on a going business than to jeopardize that business to get rid of a poor partner. However, if you're looking into the long term and if you are confident that you are not going to kill the business, its better to be rid of that partner who most certainly will continue to cause problems in the future. This is strictly a matter of short term/long term strategy vs perception of risk. There is no correct answer, just a decision based on all the known facts some of which we don't know but Dave does. It is clear that you think the the mill operating costs are higher than those that have been announced. If you are right on this point I can agree with your point that the partner may be used as an excuse to close the mill. My opinion is that the announced mill costs are reasonably accurate. Why? Because why would there be so much wrangling over an asset that had no economic value. Its just a hunch with few supporting facts. Pete

To: Bearcatbob who wrote (3031)	1/16/1999 9:25:00 AM
From: Dave R. Webb	Read Replies (1) \| Respond to of 4066

Bearcatbob. Discussions are very sensitive now, and a public forum is not the place to outline what will happen. I can outline part of what may have happened in the following. The fact that an operation produces an operating profit doesn't mean it should be operated. Consider the hypothetical case of Bob and Jim, a partnership that form a farming company called BAT. They figure that they can invest $200,000 in corn, and make $300,000 in 8 months. They both agree to put $100,000 into BAT which is to rent land, buy seed and fertilizer, then harvest and market the corn. Jim explains to Bob that he will provide his $100,000 once he sells his corn from last year's harvest….sometime in the next month. Once the first $100,000 is spent and the land is rented and the seed and fertilizer is purchased, Jim explains to Bob that he'll be a bit short, but that he'll cover all costs including harvest and marketing. He points out that he's lived in this town all his life, and can call on favours from old friends. As winter approaches, and Jim drops the ball again, Bob digs deep into his contingency funds and advances the funds according to the BAT operating agreement which provides for dilution of a deficient party's interest, or a penalty clause. Jim opts for the penalty clause in a letter to Bob. BAT makes the harvest. The $300,000 from the corn sale is terrific, and the $100,000 profit is as expected, but Jim is adamant that he owns 50% of BAT, points out that he has opted for the penalty clause in the agreement, and will pay that from next year's harvest. Jim claims $150,000 from the pool. Jim is ecstatic, Bob is furious, and the manager of BAT is asking for $200,000 to do it again next year. BAT is asking for funds, Bob doesn't trust Jim, and Jim now owes Bob $100,000 plus interest and penalties. Looks like Jim will be short again. What should Bob do? BAT operated according to plan, it was profitable, and should have been a great deal. In fact, if Bob owned 100%, or the partnership worked as it should have, it is a wonderful money-making machine…. but the smart thing for Bob would be to say no. Not another nickel into BAT until Jim comes clean. Stay tuned…this story could continue. Dave