Thursday, November 1, 2007

Going for Gold - The Emperor's New Clothes

Gold continues to climb, closing in on US$800/oz, and it won't stop there. Here's another little tasty gold treat for all you punters out there:

Emperor Mines (EMP.AX) is a company that has undergone an amazing transformation in recent times. Not more than 6 months ago, the company was laden with debt and underperforming assets. Since then it has managed to sell it's Vatokoula mine, it's Porgera mine, and is soon to announce the sale of it's Tolukuma mine, leaving it debt free, with cash and investments of around $68m and a very valuable exploration program. Furthermore, it has now announced a friendly merger with Intrepid Mines, which has the Paulsens gold mine and the Casposo gold-silver development project.
The merger is the merchant banker's ideal "1+1=3" story. The combination of Emperor's cash and strong management team, plus Intrepid's quality assets in desperate need of cash and management, has the potential to really create value. Furthermore, being a laregley unhedged gold producer (at low cash costs), MergeCo will be very exposed to any upward movement in the gold price.
At a share price of around $0.07 to $0.09, the stock represents a real bargain. In addition to this the sale of Tolukuma will add another $0.015 to the share price, as this will be distibuted to shareholders before the merger.

Maurice's Rating (Take a swing)

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