Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : ECM.VSE - El Callao Mining. -- Ignore unavailable to you. Want to Upgrade?

To: yosi s who wrote (1200)	2/20/1999 5:49:00 PM
From: BAKE	Read Replies (1) \| Respond to of 1253

Questions and Answers with Investor Relations at ECM. ***My Questions to IR.* #1 I know gold prices are way down. #2 I know junior gold companies are out of favor. But ECM is a viable mine with 2.6 million oz gold plus alot more potential,and was trading at $0.12 last week.(now up to $0.18 bid as of Feb.5). Bema bought ARA.U for 3:1 swap (when Bema was trading at~$3.40-$3.50)= ~$1.10-$1.20/share. Bema needs to do something to Boost shareholder value. Questions: 1)ECM has no cash, how will they fund a $6 million final feasibility study? A private placement at $0.20 would be absolutely ridiculous. ECM has alot of debt already,and to take on another $6 M loan would not be good for the stock price. 2)Could Bema buy out ECM?(I know Bema's stock price is also down). 3)Could Bema announce their "intention" to buy out ECM at some time in the future? At least this would get ECM's stock price up allowing speculators to trade the stock. I am assuming Bema is planning to buy ECM some time in the future anyway.* Why not announce it now? (I noticed on the Bema web site that Bema's 'future' Gold production graphs 'do include' ECM's reserves). 4)What are ECM's goals? 5)What is Bema doing to prop up ECM's pathetic share price? I am assuming Bema's goals are to be a Senior World Gold Producer in the future. Bema runs ECM. Therefore must think of ECM shareholders as well as Bema shareholders.Bema "must not" help themselves at the expense of ECM shareholder. To dilute ECM anymore would be unacceptable! To make ECM take on alot more debt is unacceptable! *Bema should either:1) Buy ECM now...or announce the same. 2) Sell the whole project to another company. If there is another option that will benifit ECM shareholders I would like to hear it. Please respond, *Answers from Investor Relations at ECM*** "I understand your angst with ECM share values, and though I can't excuse them, I might be able to shed some light on why they are not responding in a more favourable way. I think foremost is indeed the fact that gold prices are down. This actually has a twofold effect. As you note, junior mining companies are our of favour. The other is that in this market, the market has completely discounted Au reserves: proven reserves count for very little. Indeed, cash flow seems to be everything, and in the case of internet stock, the gamble on future cash flows. (note that these stocks don't have any assets.) The fact that ECM has a viable mine, with lots of reserves, seems to mean very little. Historically, mines such as envisioned at Lo Increible have lasted many years beyond the initial reserve estimates at ever increasing financial returns. This is just the way this market is. We have not helped this situation. Bema/ECM has not been known for being overly-informative, and in many cases the market assumes no news, is bad news. We are attempting to fix this problem. There have been delays with news releases at ECM; geological analysis took much longer than estimated, the engineering was thus delayed etc., but some kind of news release should have at least kept the stockholders up to date on what was happening. We will endeavour to fix this lack of communication. I will attempt to answer your questions. 1. The fact that ECM does not have any cash at the moment does pose a problem as to funding a final feasibility. At present, the company intends to complete a feasibility with the help from Bema. However, rather than traditional equity financing, El Callao and Bema are exploring other ways to finance this next step of advancing the Lo Increible Gold Project. As for the current dept owed to Bema, it is currently being held as a note payable to Bema. We are more than aware of the dilution factor to El Callao if financing were to be done at these levels and are working to avoid such an event. 2. It has always been an objective for Bema to take-over its juniors when conditions warrant it . Given ECM's debt to BGO, this action would make a lot of sense. However, even if BGO were to offer a premium, in this market that may not be in the best interests of ECM shareholders. Bema's officers take very seriously the best interests of the ECM shareholder, and any action by Bema in this vein, would have to be in both parties best interests. There has been much talk and speculation as of late on this, but there has been no moves by Bema along this route, and no immediate action should be read into this. 3. Without definite intent by Bema to take over ECM in a stated time frame, any announcement to the effect would be against the rules. It is not acceptable to make such a statement without some current time frame. This time frame does not at present exist. In any case, given BGO's low profile in the market today, such an announcement may very well do little for ECM's value. Bema's future gold production graphs only include Bema's share (based on ownership of ECM) of ECM's production. 4. ECM wants to advance the lo Increible property to production and realise a good return on investment to shareholders. This return may best be realised at some later date by a take-over by Bema or some other party, but any speculation on this option at this time is unwarranted. 5. Other than continuing to advance the project, and to enhance the information flow to shareholders and the market, there is very little BGO can do to prop up the share price. I hope that this may be of some help to you, and I apologise for my delay in getting this off to you. Thank you for your interest." John Devlin, Investor Relations