Firstgold Corp (fka FGOCQ)

[GreenOcean]

Complete DD why to Buy...from TOUCAN
1. Assets: $130M Liabilities: (Secured + Unsecured creditors $32M)
2. NOLs: $40M - $50M
3. Big Attorney Mr. Miller
4. Attorney's Client List
5. Relief Canyon: http://reliefcanyon.com/Home_Page.html
6. Gold is going to $2000oz?
7. 196,770,012 O/S
8. Insiders cannot sell during BK
9. Anything in between
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A) If FGOC is liquidated and the buyer does not want to merge or aquire our shares: $130M in assets - $32M in liabilities = $98M equity.
If FGOC is merged or restablished by a buyer (the smartest way for an investor to go) you utilize the NOL's so assets become: $130M+$50M = $180M - $32M in liabilities = $148M in equity.
Read Pages: 14 & 15 to find the NOLS are $40M-$50M
http://www.sidedraught.com/stocks/FGOCQ/04202010%20Hearing/Transcript-%5BCourtesy%20Iggles2009%5D-Reno_Firstgold%20Corp_042010.pdf
what does this mean?
The loss carryover has a direct effect on market value by sheltering future income from tax, and a direct effect on book value due to the recognition of a deferred tax asset.
Basically a legal way to offset income on past Loss carryover!
http://www.accessmylibrary.com/article-1G1-113231551/valuation-firm-tax-loss.html
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Net Operating Loss
http://www.ibfd.org/portal/pdf/Excerpt_MergersandAcquisitions.pdf
4.1.1.3. Preservation of tax losses
All of the tax attributes of the merged corporation, including net operating losses (NOLs), transfer to the surviving corporation in a tax-free merger (Sec. 381).
Subject to the limitations discussed below, the surviving corporation in a statutory merger or consolidation of corporations may carry forward the {NOLs} of the absorbed companies to reduce its taxable income in the 20 subsequent tax years from the tax year in which the loss was incurred (Sec. 172). NOLs may be carried back 2 years.
Sec. 382, however, limits the use of NOL carry-forward losses, and certain other tax attributes by the surviving corporation. If the pre-transaction shareholders of the loss corporation do not own at least 50% of the fully diluted equity (other than non-voting, non-participating preferred stock) of the surviving entity as applied under the rules of Sec. 382, the use of the NOLs by the surviving corporation are limited to the fair market value of the merged entity immediately before the transaction multiplied by the highest long-term tax-exempt bond rate applicable for any of the 3 months before the transaction (for FGOC this would be $100M equity times about 5.8% or $5.8M).
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B) FGOC is being auctioned off on Nov. 26th to the highest bidder per this PACER filing dated 10/13/10: Motion For Sale/Use/Lease of Property under Section 363(b) Motion For Order Approving Sale Procedures with Proposed Order Filed by EDMOND BUDDY MILLER on behalf of FIRSTGOLD CORP. (MILLER, EDMOND) (Entered: 10/13/2010) The payment according to the PACER document is CASH. The only reason it is being auctioned off is because it benefits shareholders.
Link to why Firstgold is allowing the sale:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=55563588

C) The secured lenders are owed 20 million dollars according to the PACER document and will be paid out first. According to the PACER document the secured lenders have a "back-bid" clause where they can use their credit to bid up the price past 20 million to ensure they get paid. That's huge!

D) They are fast tracking this bankruptcy and sale to preserve the value of the leases and the NOL's as they are time critical. Typical bankruptcies last years, this one will be done in 11 months.

E) The PACER document says that 60 investors and companies have been contacted to come and bid, and in excess of 30 have visited the mine to do due diligence so far!

F) The assets of FGOC are INDISPUTABLE and are growing as the price of gold increases. The assets are ~130 million in equipment/DCF gold + 50 million in NOL's as follows:
http://www.scribd.com/doc/30832353/FGOCQ-March-2010-Mor
Note item 14, the DCF value of the gold. This is liquid cash value of the gold, it stands for Discounted Cash Flow, or an appraisal, which is what you would end up with if you mined and sold the ore after all costs. You do this with housing too, do a DCF on what the real value of the home is if you were to sell and get the money. The 86 million is the number of dollars you would net profit if mined. This was done in March when gold was 1100/oz. Gold is up 30% since then. So the 86 million is now worth 25.8 mil more or a total of 111.8. The total assests were 105 mil, now 130.8 mil! With gold continuting to rise if we can get to 1500/oz by the end of November that would be a 36% increase over the March valuation, so the 86 million would be 31 million more, or 117 million. Total assets would be 136 million!
Add in the NOL's of 40-50 million and you are looking at 186 million.
All in all FGOC has 266,000 oz of gold in the ground at Relief Caynon. Currently at 1374/oz that is worth 319 million, but remember, you have to use a DCF model to figure out how much cash you would actually get out of it.





G) So what do shareholders get? Remember the secured lenders get the first $20M dollars and unsecured creditors get $12M or $32M total.

O/S is 196M

If FGOC is liquidated Assets are $130M:

a) if we get 10 cents on the dollar the bid is $13M and the secured lenders get that, we get nothing
b) if we get 20 cents on the dollar the bid is $26M the secured lenders get paid off and the unsecured creditors get $6M, we get nothing
c) if we get 30 cents on the dollar the bid is $39M the secured + unsecured creditors get paid off, we get $7M or PPS .04
d) if we get 40 cents on the dollar the bid is $52 million this leaves shareholders with $20M or PPS .10
e) if we get 50 cents on the dollar the bid is $65M million this leaves shareholders with $33M or PPS .17
f) if we get 60 cents on the dollar the bid is $78M this leaves shareholders with $46M or PPS .23

If FGOC is merged or restablished Assets are $180M:

a) if we get 10 cents on the dollar the bid is 18 million and the secured lenders get paid, we get nothing
b) if we get 20 cents on the dollar the bid is 36 million this the secured + unsecured creditors are paid off and this leaves shareholders with $4 million or .02 PPS
c) if we get 30 cents on the dollar the bid is 54 million this leaves shareholders with $22M or .11 PPS
d) if we get 40 cents on the dollar the bid is 72 million this leaves shareholders with $40M or .20 PPS
e) if we get 50 cents on the dollar the bid is 90 million this leaves shareholders with $58M million $30M PPS
f) if we get 60 cents on the dollar the bid is 108 million this leaves shareholders with $76 million or .39 PPS

H) A Chinese company offered 26.5 million for a 51% stake in the company when gold was under 1000/oz. So a 100% stake would have been a 53 million bid, and now gold is near 1400/oz. That would be about a 81 million bid.

Link to Chinese CO DD:

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=55518006

I) Relief Caynon Mine Production Estimates: Someone is going to come, buy this up, and crank it all out in 3 to 4 years making a huge profit. The company itself says it has a mine life of 4 years producing 60,000 oz of gold per year. That would be revenue of 120 mil/year if gold averages 2000/oz. In Nevada the cost to produce 1 ounce of gold is about $630 dollars (check the Newmont financials a paragraph below). This is why FGOC was break even or at a loss for years. Gold went above 700/oz 2 years ago. At 2000/oz that would be about $1400/oz profit, an amazing 75%.

Link to Powerpoint Presentation showing mine life, check slide 21:

http://reliefcanyon.com/uploads/Relief_Canyon_Marketing_Presentation_-_Final2.ppt

Link to Executive Summary of Relief Cayon Mine

http://reliefcanyon.com/uploads/Executive_Summary.pdf

J) The case for a merger into another mining operation is strong in order to utilize the $50M in NOL's. There are many mining operations in Nevada, including the worlds largest, Newmont, who would love the NOL's. Newmont is a 30 billion dollar company that gets about 1.5 million ounces of gold out of its Nevada ops every year. Newmont, which would not give FGOC a 50% equity interest in the merger would only get $5.8M in NOL's, but those companies willing to give FGOC a 50% equity interest would get the full $50M.

Link to Newmont financials:

http://investor.shareholder.com/newmont/releasedetail.cfm?ReleaseID=463607

Newmont operates litterally right next to FGOC, as in 1 foot away. Look at slides 10 and 11 here:

http://reliefcanyon.com/uploads/Relief_Canyon_Marketing_Presentation_-_Final2.ppt

The former CEO of FGOC Scott Dockter founded Dura Rock in 2009 and merged it into Steele Resources SELR just 4 months ago in June 2010, creating a new aquisition and merger mining company. This is one merger candidate that would use the $50M in NOL's, but they would need to get some financing to be part of the bid process. With the price of gold skyrocketing SELR ought to be able to get the financing. They are building a portfolio of assets quickly, and FGOC is in their sites. If we combined with SELR after paying off FGOC's creditors it would immediately add about $150M in equity to SELR, and we'd own 50%.
Scott Dockter Owns 7,839,486 Shares of FGOCQ

Per their last 10K. I'd say he has a vested interest in sucking FGOCQ into SELR.

http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=6789398

Link to Dura Rock (under construction):

http://www.durarockresources.com

Link to Steele Resources:

http://www.steeleresources.com

SELR just aquired the Fairview Hunter Mine in Nevada on Sep 27th, 2010, the Fairvew Hunter mine was a former exploration property of Firstgold. You can see here that the new Dura Rock website has the very same picture of the Fairview Hunter mine on it as does Firstgolds website:

http://www.firstgoldcorp.com/fairview_hunter.asp

Also, a MOD has talked to Scott Dockter this month, he's interested in a merger:

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=55470452

K) In conclusion the options that could happen are a) a liquidation b)a merger c)a restablishment of FGOC by satisfying the lendors and mining the Relief Caynon.
The NOL's are the key. They are valuable and real assets. Any mining operation in the area is going to want them, or if FGOC is reinstated we have instant value. FGOC is worth $98M without the NOL's and $148M with the NOL's. If gold goes to 2000/oz in 2011-2015 FGOC and its mining claims are worth 50% more than using the 1374/oz gold we are using now in our estimates. Bidders are likely bidding on a rise in the price of gold.

IMO FGOC shares won't be liquidated, but merged or reinstated as the gold boom is underway. FGOC was trading at .30 two years ago with a 131M O/S when gold was 700/oz and had a market cap of $39M which factored in the price of gold, assets, and liabilities. Gold is now about 1400/oz, our market cap should be about $100M based on assests, liabilities and skyrocketing gold. IMO the both secured and unsecured creditors will be paid off and we'll have a $100M company going forward which is easily obtainable in pinky land.

Auction time: PPS .20-.30 based on speculation

After that: PPS .50 with cap of $100M

***Gold is in record high territory and moving higher, this could be a bonanza, not only for us, but all gold companies, it's their time to make a lot of money...just check the Newmont fins...amazing.