takeover. not such a bad thing, page-9

Good points from all. I may not be right. I guess we will know a lot more when BSG's quarterly cashflow report comes out later this month.

siamese, if they did a proper feasibility study, rather than an internal estimate, I'm a bit miffed that they didn't inform the market of the results. In fact, I'm not convinced that they have completed a feasibility study.

For example, in the 2006 Annual Report (page 7), they said:-

"Following receipt of various permits, development and construction of the Palmarejo project is forecast to commence on completion of the feasibility study in the last quarter of 2006 with mining activity scheduled to commence in the middle of 2007."

Now, you can't finish a full feasibility study without the mining study being complete (goes without saying). In their Dec 06 Quarterly, they stated:-

"Mine Design Associates (MDA) in Reno, Nevada are progressing the mining study towards completion. Based on the preliminary results from the study, the supply of equipment required for open pit mining of the deposit has been determined with equipment suppliers to enable pit development work to commence mid 2007."

They were as good as their word - they ordered a bucketload of equipment, built access roads, signed a contract for a power plant, etc. during the next quarter. MDA's preliminary results must have been impressive. However...

In their Mar 07 Quarterly (dated 27 April), they say:-

"Mine Design Associates (MDA) in Reno, Nevada have completed most elements of the mining study. Additional support work including a follow-up geotechnical review was still in progress at the end of the quarter."

Hmm...that ole mining study's taking a while to finish. Should have been done in the Dec 06 quarter.

In the same report, they say:-

"Purchase order commitments and expenditure totalled ~US$50.4 million at the end of the March 2007 quarter (excluding mining equipment). Additional orders placed during the quarter included the lime slaking plant, plant instrumentation, road hydraulic works contract and assay laboratory equipment."

Whoa!! Isn't there some sort of proverb involving carts and horses?

Seven days later (4 May), we have the takeover announcement. I wonder whether the reason the due diligence period kept on getting extended, then extended some more, was because CDE actually insisted on seeing a completed mining study, before they signed off on the deal?

I also wonder what the project economics of the open pit operations were. Maybe they needed to add in the underground to justify the purchase price (and maybe BSG - given that they couldn't even get an open pit mining study out of their consultants - hadn't even looked beyond the open pit at this stage).

Maybe if BSG had just needed an extra $20m, they could have gone to the market and picked it up fairly easily. However, given the commitments announced in the March quarterly and, given the recent estimate that we now won't be in production until 2008, I suspect they might have needed to rake in a teensy bit more.

As I say, I could be wrong - it's all guesstimation. However, I'll be a veerrry interested reader of their Jun 07 quarterly.