Now, here's something else which is interesting.I commented on...

Now, here's something else which is interesting.

I commented on the Kensingtion Gold Mine thread that the court decision also stopped port development and that they only way they can get into the place now is via boat or helicopter.

Additionally, since the takeover was proposed, our Bolivian friend, Morales, has announced a 12.5% (on net profit) increase in mining taxes. That's got to significantly impact upon and reduce the net present value of the project.

Now, put the two of these together, and what sort of an impact do you think they have on Coeur's net asset value?

What needs to happen, in order for us to walk away with $9m of Coeur's money in break fees? A "Coeur Adverse Event Change", defined in the agreement as:-

"there being no matters, events or circumstances which
individually have or are reasonably likely to have, or when aggregated with all other such
matters, events or circumstances, have or are reasonably likely to have, a materially adverse
impact, namely a decline of 5% or more in the consolidated net assets of Coeur from the level
as at 31 December 2006."

For all you non-lawyers out there, that basically means that, if an event occurs which is reasonably likely to reduce Coeur's 31/12/06 net assets by 5%, we're out.

Now, referring to their 2006 Annual Report, Coeur's net assets at that date were $849.6m. 5% of that is $42.48m.

The carrying value of Kensington is $206m. Carrying value of Bolivia seems to be around $40m, with some $100m to be spent on it this year.

So, not only can you not go ahead with the mine at Kensington, you can't even build a dock there. And, now Bolivia is 12.5% p.a. less profitable than it was when the feasibility study was done.

Now, given that a $43m reduction in value results in an Adverse Event and, given that Kensington is presently dead in the water and Bolivia's economics just ended up 12.5% p.a. worse, what do you think might recently have happened to Coeur's asset value?

Well, I guess that all depends on how and when their auditors require them to reduce those projects' carrying values. Here's an example, once again from their 2006 accounts, talking about the Kensington mine litigation:-

"This litigation has contributed to an increase in capital costs. While the Company believes it will ultimately prevail in the defense of the awarded permits, in the event that the Company does not prevail, it could be necessary to seek an alternate site for the tailings disposal facility. The Company is not aware of an alternate site that could be permitted or would be economic. Therefore, it is possible that an adverse legal decision could render the project uneconomic and an asset impairment would be necessary."

Hands up, who thinks they should now reduce Kensington's value somewhat below $206m?