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March 15, 2009



Hi Monty,

What do you think of La Mancha (LMA.to) as a take over target.

Cashflow for 2009 should be around 2.8, in 2010, it should go down to 2.1 which make this play quite interesting.

They have near 10M cash on hand, already are generating positive cash flow, so risk of bankrupcies is low. They operate 3 mines, so there is some good diversifications...



Concerning the WGW takeover, I have information from a reliable source that the WGW top management is scheduled to receive lucrative positions at NGD once the deal is complete. Perhaps that is why they agreed to a takeover at such low margin. They personally are getting a long term deal that, eventually, outweighs the gains they would've gotten from higher margins.

But props to you for suggesting the "may be they know something we don't" idea. Never let your guard down ...


Rich K

you have to be careful about your assumptions-it could be that you are underestimating two extremely important priorities in ths current market environment:

1 Access to cash and financing
2 Liquidity concerns

Even if a company is cash flow positive, unless they have a hoard of cash, for small companies it will be difficult (expensive either in interest rates or dilution) to finance large exploration projects-and building out their expansion organically takes a lot of time-and time is risk-its easier to sell out for stock in a larger better capitalized company with better liquidity and improves your chances for success and also do it in less time-remember-theses are stock for stock deals-not cash payouts-that makes a huge difference-these insiders are still taking back paper in another gold company and you dont know for sure if they are selling their new shares or keeping them

Liquidity is also a concern -in this market environment I dont see a mad rush by individual investors to the jun ior mining stocks-probably because they are hurting financially and also somewhat risk averse to invest in an illiquid venture exchange listed security-hence the strategic buyers are the only current bid, and they are too smart to pay up-what we need is te dumb money to bid the junior prices up forcing the strategic investors to pay more-but that dynamic isnt happening due to the economic backdrop, the crisis, etc


I do think that Wheaton has raised the current price at least 50 percent or 50 cents over where it would be otherwise. But yes, it is low...not a 'fully valued price' (conversion rate, actually) by any measure. Wheaton signed the deal at a very low conversion rate. That conversion rate will likely result in a substantially higher price before the deal is finalized because I expect Wheaton to move up with higher silver prices soon. Then it will be the same conversion rate but a not-as-low price.

Furthermore, I hoping that Franco Nevada will jump in and offer a higher bid. And SST shareholders should vote no. If Wheaton thinks they won't get 67% approval, they will improve their offer and *still* be getting Silverstone cheap.


I'll give you that one about the front running. Makes you want to just skip stock market investing given how crooked it is.

Would you agree that SLW got SST.V deal for a very low price? If not, what about you make you think differently? The fact of the copper related counter-party risk in their silver streams?


Hi Monty,

I think it is misleading to characterize the result of the Silver Wheaton buyout of Silverstone as "resulting in a 16% pop for Silverstone". The difference in closing price two days before the announcement compared to the closing price was around 45%. Frontrunners bid the stock up on the day before the announcement, so using the 1 day increase in price to prove a puny premium is misleading.

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