***MNG ,an alternative view from yahoo board
The biggest problem facing this stock is the fact that it has effectively no gold production and all kinds of hedge and derivatives obligations.
With the Nunavut authorities effectively banning development of Doris reserves for now, it places the company in a disastrous spot. In the past, the big champions of Miramar always claimed that, even in the face of zero gold production, its hedge and derivatives obligations were not dangerous. The Miramar exponents always claimed that the company need only hand a piece of its Hope Bay reserves to the hedge and derivatives counterparties and that would satisfy them.
NOW the major problem is that those Hope Bay gold reserves (and all other Nunavut properties in that region) have been rendered worthless in that they cannot be developed, period, unless the government changes its mind about gold development.
So even if a company like Goldcorp wanted to buy a piece of Miramar, given the current environmental opposition and lack of government endorsement, those Hope Bay reserves have zero appeal to any third party acquisitors or the hedge and derivatives counterparties. In effect, Miramar is now worthless, completely worthless, unless some government authority quickly overturns the ruling against mining in the region. Even if Miramar were liquidated today, it is quite possible there might be no offers for Hope Bay whatsoever, given that the region is currently blocked from development.
The smart money recognized the uncertainty and bailed out today without asking questions. They recognize that Miramar is facing a major world of pain because, unless it can exploit its reserves, it must still come through on hedge deliveries and derivatives obligations. The only problem is that once it spends its Treasury for fulfillment of hedge obligations and derivatives, it will have no further assets UNLESS the government allows it to develop Hope Bay. Again, let me reiterate (and for purposes of understanding why investors were racing for exits today)
Effectively Miramar is a worthless company today.
AI
