Replies to post #119363 on Zeev's Turnips Patch-No Politics (ZEEV)

[mlsoft]

nspolar...

Thanks for the encouragement on BGO - I have it just for a trade here, and I think $400+ gold is not that far off. I had looked at KRY several times in the past, but never bought it. I hope you do well with it. I sold all my DROOY (along with GFI and HMY) last summer due to the South African political situation, and have not regretted it. Gold stocks have enough inherent risk without adding political risk to the mix, and I think the South African situation will get much worse if history is any indication.

Thanks for the post and good luck to you.

mlsoft

[basserdan]

*** Gold related post (KRY) ***

"KRY really smoking here lately. Wished I had more than I do, but it was too risky to buy en masse. It may be a real sneaker, if they can line up all the marbles."
==============================================================

Hi nspolar ...

Is this the reason that KRY has been smoking?


Troubled miner to see light of day
Crystallex shares 'in play' as Las Cristinas heats up

By Thom Calandra,
CBS.MarketWatch.com
1:19 PM ET June 13, 2003

SAN FRANCISCO (CBS.MW) - Beleaguered Canadian miner Crystallex International Corp., grasping rights to a world-class gold asset, is likely to be sold before it ever develops the vast Las Cristinas deposit.

That's the view of some of the hedge funds and other investors who recently were lining up behind the company's shares. Trading in Crystallex shares (KRY: news, chart, profile) on the American Stock Exchange is running four to six times average daily volume.

The same brisk activity this week also applies to the company's Toronto-traded shares.

Crystallex shares rose more than 20 percent earlier in the week after The Calandra Report, a subscription service owned by CBS MarketWatch, quoted a mining analyst as saying he expects a bid for the entire company in the next month.

Other fund managers quoted in the report said the company's Las Cristinas deposit, awarded to Crystallex by the Venezuelan government after years of bungled negotiating and political strife, will almost certainly see development. The question is: by whom?

"I think the executives realize this thing has become so mispriced that it will become irresistible to a company looking to replace reserves," Robert Bishop of Gold Mining Stock Report told me Friday morning.

Crystallex CEO Marc Oppenheimer, in an interview this week, said Crystallex will release a feasibility study conducted by engineering group SNC-Lavalin in the late summer or early autumn. The study will examine costs for a 20,000-tonne-per-day facility at Las Cristinas. Some observers say the first phase of such a project could require $200 million or more, far more than the company would be able to raise, even with the help of newly hired banker Deutsche Bank.

Fund managers tell me several companies are busy auditing Crystallex's activities and financial statements this week in preparation for a possible bid or a 50-50 licensing or development agreement for Las Cristinas, which is estimated to hold about 10 million proven and provable ounces of gold. The company, of course, declines comment.

At this week's San Francisco gold conference, more than a dozen small to mid-sized hedge funds were inquiring about Crystallex and its Venezuela efforts. Las Cristinas is one of the world's largest known untapped gold deposits, and major gold producers are desperate to replace diminishing bullion reserves on their balance sheets.

Several fund managers tell me they expect to see an outright purchase or at least a large corporate backing of the company or its Las Cristinas venture within the next month. The Venezuelan government awarded full rights for Las Cristinas to Crystallex in September of last year.

This week, an auditing committee of Venezuela's legislative body approved a report that probed the September contract between Crystallex (CA:KRY: news, chart, profile) and the country's state-owned holding company, CVG (Venezuelan Corporation of Guayana).

"We are pleased to see the news in Venezuela regarding the National Assembly's review and support of the Crystallex CVG agreement and the cancellation of the Minca agreement," Crystallex spokesman Richard Marshall told me. "We are waiting to see a final copy of the resolution."

Minca is a previous joint venture between CVG and Vannessa Ventures Ltd (CA:VVV: news, chart, profile), a Canadian company.

To be sure, some say the recent Crystallex trading activity might be tied to unwarranted speculation by small investors, alongside the conversion of debentures into equity by large holders.

The convertible bonds, issued by the company to raise much-needed cash, are priced for conversion into stock at 15 percent below the Crystallex market price. According to The Calandra Report, some owners of those so-called toxic converts are more than likely shorting the stock and delivering their converted shares against the short for an instant payday. These convert holders are "monetizing their investment," as they say in the business.

Others, speaking to me at the San Francisco gold show this week, said the stock rise may be because of "significant short covering or a big acquisitive buyer" looking to close the gap between the company's $1.50 U.S. share price and a possible offer of $3 or more.

Oppenheimer, the chief executive, said he would decline at this time to comment on any M&A speculation. See: Crystallex CEO says shares are mispriced. Oppenheimer also told me he expects continued support from Venezuela authorities in Crystallex's efforts to develop Las Cristinas.

"Deustche Bank has met with the Venezuela government. I think that speaks for itself," Oppenheimer said this week about the company's new banker.

Industry leaders say Las Cristinas cannot remain undeveloped for long. The government of Venezuela hopes to raise billions of dollars to further efforts to exploit offshore natural gas deposits, and some of that money would come from gold sales. The project would deliver an approximately 3 percent royalty to the government and another, smaller royalty to state-controlled CVG.

In addition, the world's major producers of gold, such as Barrick Gold (ABX: news, chart, profile), are nearly all losing part of their gold reserves as mines get tapped out or as environmental restrictions reduce output. Gold reserves are a fundamental Wall Street measure for evaluating the worth of a miner's shares.

"This deposit is clearly at the top of everyone's list," says John Clarke, chief executive of Nevsun Resources (CA:NSU: news, chart, profile), a Canadian company that is exploring for gold in Africa. Nevsun was the world's best performing gold stock in 2002.

"Many companies are very challenged on the issue of reserve replacement," says Richard Sacks, an asset manager at Phoenix Advisory Management in Chicago and large Crystallex shareholder. "It is the most critical issue. Can an ore body of this size be overlooked forever?"

If Gold Mining Stock Report's Bishop, considered one of the deans of mining strategists, is correct, Crystallex will see a transforming corporate event sometime very soon.

It just may be the Crystallex board that paves the way for an outright purchase or 50-50 Las Cristinas partnership. The Crystallex board of directors is led by Robert Fung of mining investment house Yorkton Financial, which is a Toronto powerhouse in the gold business.

Board members, in the opinion of some observers, may be watching a class-action shareholder lawsuit filed against Barrick Gold this week. "Barrick assured the markets that it was improving its operations by keeping its production costs in check and that the company expected to earn $0.42-$0.47 per share in 2002, even taking into account the phasing out of several mines and decreasing ore quality (which increases costs) in several of its mines," according to the complaint.

The lawsuit concerns a period of the company when Barrick's Randall Oliphant was chief executive of the gold giant, roughly from February through September 2002. Oliphant, who has since resigned, first promised a $2 billion, five-year growth plan, then did a stunning about-face. See: Barrick CEO describes timing snafu.

In my opinion, Crystallex shareholders - if there is no major Las Cristinas financing for the company, or an outright sale of the company or joint venture -- will start to wonder just what they can do to extract more value from their depressed shares.

(I'm not predicting legal action, and I am not saying that any legal complaints against the company would be warranted. But after years of political and corporate strife, including two government coups and a pending review by the Toronto Stock Exchange on the company's eligibility for continued listing, shareholders are ready for a sizeable return on investment.)

Oppenheimer, the CEO, says he is confident of his company's strategy. "Our objective is to build the project," he told me. Few CEOs at this point would say anything different, even if they were on the verge of an outright sale.

On Friday, Crystallex shares in U.S. trading were unchanged at $1.46.

http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&gui...

Regards,
Dan

P.S. Interesting handle. Does it signify that you have been to both poles, possibly as a submariner?

[basserdan]

*** Gold related post (KRY) ***

KRY really smoking here lately. Wished I had more than I do, but it was too risky to buy en masse. It may be a real sneaker, if they can line up all the marbles.
==============================================================

nspolar...

I thought this might be of interest to you...


Enhancing, or romancing, the cash
Plus: The latest on Crystallex speculation

By Thom Calandra,
CBS.MarketWatch.com
1:29 PM ET June 16, 2003

SAN FRANCISCO (CBS.MW) -- This is for the folks with the $5 trillion of money-market funds throwing pennies into the jars of investors.

The world over, investors are engaged in a search for greater and greater returns, especially against paltry yields from money markets and other cash-linked deposits.

Pimco, which manages assets in excess of $100 billion, says that "enhanced cash investments," or a mix of short and longer-term debt securities across different investment grades, can dramatically improve returns.

All you have to do is learn to live with a little volatility in the bond markets.

Or the currency markets.

Investors of late have been looking outside the U.S. for higher-yielding certificates of deposit. A 6-month certificate of deposit in Australia, for example, yields about 4 percent, far more than a similar one in the U.S.

But back to the bond market. "Two tough years for bonds were 1994 and 1999. During both periods, the U.S. economy was strong and interest rates rose, hurting bond performance," say Paul McCulley and Paul Reisz of Pimco, which specializes in fixed-income securities.

The two managers, who are part of Pimco's enhanced cash team, say investors seeking alternatives to that 1 percent money-market deposit might consider a selection of so-called ultra-short debt maturities, those of six years and less.

During the rocky bond market in '94 and '99, for instance, ultra-short and short investment-grade bonds, and short municipal debt strategies performed positively, they say. "The ultra-short strategy had slightly stronger performance as a result of its shorter duration or reduced exposure to interest rate risk."

A word of caution for those who think they easily can triple their money market returns with little or no risk: They can't. Creating a mix of laddered maturities in a portfolio is wise for supplementing an investor's cash allocation over five or more years, the two money managers say.

"Over the past five years, for example, taxable money market funds, as tracked by Lipper, returned 4.16 percent, while ultra-short funds returned 4.74 percent and short investment-grade funds 5.49 percent," say McCulley and Reisz. This is the kind of difference investors feel in their wallets, especially in the long run."

The article by the Pimco money managers was published in Investment Advisor Magazine.

The Calandra Report

I'll have more in The Calandra Report later this week on several fronts, including a natural gas story almost too good to believe. I'll also have more on Crystallex International (KRY: news, chart, profile), which told the Toronto Stock Exchange on Monday it knew of no corporate reason for a nearly 100 percent gain in the company's shares over a week. The gains came in trading activity that was three to five times average daily volumes for the company's American Stock Exchange and Toronto-listed shares.

Last week's edition of subscription service The Calandra Report examined Crystallex's efforts to develop Venezuela's Las Cristinas, one of the world's largest proven, and untapped, gold reserves. On Monday, Gold Mining Stock Report's Robert Bishop, quoted at length last week in newsletter The Calandra Report, reiterated his belief the Toronto-based company will receive a takeover offer, or some other backing from a big company, and soon.

"Venezuela's National Assembly has now said on four occasions that Crystallex has legally been designated to be the operator of Las Cristinas (foreign companies never own projects in Venezuela, they obtain rights to operate projects)," Bishop said Monday morning.

"Las Cristinas is simply too large a gold deposit selling at too low a price to escape the attention of larger companies," Bishop, one of the longest-running and most highly regarded gold-mining strategists in North America, told his subscribers.

"My observation about some party moving on Crystallex by the time of the company's annual meeting (in another week) is more an observation that management needs to be in a position to offer the prospect of a future that's markedly different from the past, or risk the open revolt of its shareholders."

Bishop, speaking to me from his California office, said Crystallex chief executive Marc Oppenheimer was seen attending the shareholder annual meeting of Glamis Gold (GLG: news, chart, profile) in recent weeks. His attendance at the larger gold company's May 7 Toronto meeting may be sparking speculation in the shares, says Bishop, who believes at least one mining company is conducting due diligence on Crystallex.

I placed a call Monday to Oppenheimer, with whom I spoke last week in San Francisco. I also placed a call to a company spokesman, A. Richard Marshall. He told me Monday he would contact Oppenheimer but that at this time, Crystallex would have no comment on the Glamis sighting. Nevada-based Glamis produces gold from mines in Nevada, Mexico and Central America. The company produced 251,000 ounces last year and says in its corporate presentations that it hopes to double that amount.

Those who read The Calandra Report know exactly where I stand on the Crystallex story. As Bishop said, the stock market is valuing a roughly 21-million-ounce Las Cristinas resource, some 9.5 million ounces of that considered a proven reserve, at roughly $5 to $6 an ounce. Crystallex International shares Monday afternoon were selling for $1.76 on the American Stock Exchange and $2.34 Canadian (CA:KRY: news, chart, profile) on the Toronto Exchange.

Thom Calandra's StockWatch is CBS MarketWatch's flagship column. The regular report is in its eighth year at CBS.MarketWatch.com. Thom Calandra is also author of subscription service The Calandra Report.

More THOM CALANDRA'S STOCKWATCH
•Crystallex, gold miner, to see light of day 1:19pm ET 06/13/03
•Crystallex executive says shares are cheap 2:15pm ET 06/10/03

http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&gui...

Good luck,
Dan

[basserdan]

*** Gold related post (KRY) ***

nspolar,

FYI

Crystallex Comments on Recent Market Activity
Monday June 16, 10:54 am ET

TORONTO, June 16 /PRNewswire-FirstCall/ -- At the request of the Toronto Stock Exchange, Crystallex International Corporation (Amex: KRY; Toronto) today announced that it was not aware of any corporate developments which would account for the recent increase in its stock price and trading volume.

http://biz.yahoo.com/prnews/030616/atm009_1.html

Dan