A1M - AIC Mines

[exgeo]

Nustar Mining Corp NMC, following the merger with Intrepid Minerals Corporation on July 4 2006 became Intrepid Mines. Issued capital of 164m shares gives market cap of AU$68m at 42c.

Current Production
Grade variability has negatively impacted reconciliation and production (reconciliation is the amount of gold actually coming out of the mill, when compared with what you thought you fed into it, based on your ore-reserve model). Previously reconciled to +4.3% (good) but last qtr ending Dec06 was minus -24.0% (not good). A team was formed to fix this by more drilling and better supervision of development activities (to reduce dilution). Planned production is about 70KOz/yr. Based on the Dec06 qtr, production will be about 68KOz.

Debt & Hedging
Westpac short term loans are in breach of covenants, but thus far waivers have been granted. This debt will need to be restructured or refinanced via equity.

2007: 50.5KOz hedged @ AU$627/Oz
2008: 44.5KOz hedged @ AU$627/Oz

Cash generation
Realised gold price for Dec06 half was US$495/Oz. Cash costs for the half were US$418/Oz. Annualising this gives 68KOz * (495 - 418) = US$5.2m (AU$6.5m or AU 4c/share). Cash costs for 12 months ending Dec06 were US$349/Oz, so assuming the company can fix the reconciliation problems and improve the mined grade (therefore reducing the cash costs toward the previous lower level) the company might look good value at a share price of AU 42c. Reported EPS for the Dec06 year was US 1.13c (AU 1.4c).

22/3/07
Production grade improved. Expect 17KOz for the qtr (68KOz annualised) which is a 16% improved on the previous qtr. Reserved funds for the next scheduled debt payment. Currently half way through both the hedging programme and debt repayment.


OTHER PROJECTS

Development– Casposo Feasibility Study (Argentina)

· Mineral resources (Indicated only): 2.2 million tonnes of ore containing 313,278 ounces gold and 8.2 million ounces silver, grading 4.46g/t gold and 116g/t silver
· Mineral reserves: 1.8 million tonnes of ore containing 270,089 ounces of gold at 4.69g/t and 6.5 million ounces of silver grading 114g/t silver (predominantly open cut)
· Average annual production of 50,478 ounces of gold and 1.1 million ounces of silver or 68,500 ounces of gold equivalent annually using base case gold and silver pricing
· Average annual operating cost: $248 per ounce of gold equivalent, or $168 per ounce of gold after silver credits (of $8.50 per ounce)
· Capital costs, including 12 percent contingency, $45.5 million
· Average annual surplus operating cash flow (at $500/Oz and $8.50 silver) after sustaining capital: $13.8 million
· Internal rate of return 15% at a base gold price of $500 per ounce and $8.50 per ounce silver, rising to 40% at $650/Oz gold and $12.85/Oz of silver
· Construction period: 15 months

 

[exgeo]

March 07 Qtly.

Qtly gold production of 17,494 Oz, bang on target for 70 KOz/yr as planned.
Site cash costs of US $361/Oz.
Weighted average gold price received US $534 (A$680 at 0.7848 US cents).
164m shares.


70 KOz * (534 - 361) = US $12.1m (AU $15.4m or AU 9.3c/share). This is not EPS because it takes no account of administration costs, tax, D&A, etc.

The operational review described in December 2006 quarterly report following the poor mine to mill reconciliation for that period (minus 27 percent) has made good progress on a number of fronts. These improvements, coupled with the natural variability seen in the high-grade Paulsens orebody have seen the March quarter factor at 104 percent or plus 4 percent. Project to date the mine to mill reconciliation is 99 percent, or minus one percent.

The issued capital is 164,279,243 shares comprising 140,697,989 ordinary shares of Intrepid Mines Limited and 23,581,254 exchangeable shares of Intrepid NuStar Exchange Corporation. The exchangeable shares are held by Canadian former shareholders of Intrepid Minerals Corporation who elected to defer capital gains tax consequences of the July 2006 merger. All remaining exchangeable shares will compulsorily convert into ordinary shares no later than July 2009.

 

[greenfs]

I am told that Shaw Stockbroking has recently issued a buy recommendation based upon their Valuation of share price at AUD1.60. Has anyone seen this report?

 

[exgeo]

Reaches agreement with Westpac bank on terms for restructuring debt payment. Debt and gold hedging should both be completed by December 2008.

 

[Bush Trader]

Any thoughts or comments in regards to the merger with emperor mines? Obvoiusly going to be a big improvement in the balance sheet with EMP's 54 million in cash reserves. DRDGOLD selling it's share in emperor looks to be the only snag in the deal?

Cheers


BT

I currently hold EMP


INTREPID AND EMPEROR TO CREATE A DYNAMIC AND WELL FUNDED GOLDPRODUCER, DEVELOPER AND EXPLORER18 SEPTEMBER 2007

Intrepid Mines Limited (TSX: IAU, IXN & ASX: IAU) and Emperor Mines Limited (ASX:EMP) are pleased to announce that their respective Boards have signed an agreement to merge the two companies.

The Merged Company

The new company, to be named Intrepid Mines Limited, will be a dynamic and well funded international gold producer, developer and explorer listed on both the TSX and ASX.

The combination of Emperor’s balance sheet strength, Intrepid’s producing Paulsens Gold Mine and its Casposo development project, and both companies’ exploration assets, together with the combined skills of the two management teams, will create a well balanced company capable of adding significant value for its shareholders.
I
n particular, the merged Intrepid’s strengthened balance sheet and the ability to secure project finance, will allow the company to immediately move forward with corporate objectives, including:
• accelerated underground exploration at the Paulsens Gold Mine;
• imminent development of the Casposo gold/silver Project in Argentina on an
unhedged basis and continued examination of early expansion options;
• immediate exploration at Taviche (Mexico) and Tujuh Bukit Project (Indonesia) and an expanded exploration budget of up to approximately A$8.0 million per annum;
and
• improved capacity to target project and corporate acquisition opportunities.
The proposed merger, if it proceeds, will take place by way of a scheme of arrangement.

Emperor’s 78.7% shareholder, DRDGOLD, has informed Emperor that it intends to refocus its attention on opportunities in South Africa and so intends to seek to realise its investment in an orderly manner prior to the scheme meeting convened by the Court to approve the proposed scheme. Emperor has agreed to work with DRDGOLD to seek to facilitate such an exit. The proposed merger with Intrepid is therefore subject to DRDGOLD being able to successfully realise its investment in Emperor prior to this time.
The boards of directors of Emperor and Intrepid have resolved to support the proposed merger.

Overview

The merger will take place by way of a scheme of arrangement, with Emperor
shareholders receiving 1 Intrepid share for every 4.25 Emperor shares held. Existing unlisted Emperor employee options are to be either cancelled for cash or new Intrepid options issued on equivalent terms and conditions.

Board and Management Structure

The merged company will benefit from the skills and international experience of the combined management teams, with personnel who have held senior positions with major resource companies such as Placer Dome, BHP Billiton, and Western Mining Corporation. Management of the merged company will be led by Mr Brad Gordon as Chief Executive Officer and Mr Laurence Curtis as President. The merged company’s head office will be located in Brisbane, Australia and the capital markets and the Americas exploration office will be located in Toronto, Canada.

The Board of the merged company will comprise at least three representatives from each of Intrepid and Emperor. Mr Colin G Jackson will continue as Chairman of the merged company.

Synergy and Benefits of the Merged Company

The principal assets of the merged company will be:
• Paulsens operating gold mine in Western Australia (100% interest);
• Casposo gold/silver development project in Argentina (100% interest); and
• advanced exploration projects at Taviche (Mexico – earning a 35% interest,
gold/silver) and Tujuh Bukit Project (Java, Indonesia – earning up to 70% interest,gold/silver/copper).

The merger is expected to deliver an expanded production profile and near term increased gold inventory potential, leveraging exposure to the gold price.
Transaction Implementation Emperor and Intrepid have entered into a Merger Implementation Deed under which they have agreed to certain undertakings and arrangements to facilitate the merger. The complete document may be found on the companies’ websites or on www.sedar.com, the official site that provides access to most public securities’ documents and information
filed by public companies and investment funds with the Canadian Securities
Administrators in the SEDAR filing system. Key terms of the Merger

Implementation
Deed are summarised in Appendix A.
The proposed merger is conditional on, amongst other things:
i) Emperor shareholder approval;
ii) Intrepid shareholder approval;
iii) DRDGOLD selling its shareholding in Emperor;
iv) The acquisition or cancellation of all Emperor options;
v) Each of Emperor and Intrepid being satisfied with the results of their respective due
diligence enquiries;
vi) Emperor having surplus net cash of at least A$54 million immediately prior to the second Court hearing to approve the scheme (taking into account any amounts provided by Emperor to Intrepid, any sum expended in respect of the Tujuh Bukit

Joint Venture and any other expenditure approved by Intrepid);
vii) Any other regulatory approvals, no regulatory action, no material adverse change, no prescribed occurrences, TSX consent; and
viii) Court approval. Both companies have entered into no solicitation - no talk provisions customary for this type of transaction. In addition Emperor has provided financial accommodation to Intrepid Minerals Corporation, a wholly owned subsidiary of Intrepid, amounting to A$5.0 million and holds an option to convert this loan into Intrepid shares.

 

[greenfs]

You will see that we seem to have a price break out of sorts on this share yesterday with a subsequent announcement today. It will be interesting to see what happens in the market today. MACD and DMI indicators are good and the US rise last night can only help.

 

[exgeo]

Emperor and Intrepid merger would seem to be a match made in heaven. Emperor has cash but no assets IAU has assets but is cash poor. Should be a case of "the whole is more than the sum of the two halves".

 

[Go Nuke]

IAU held up pretty well I thought considering how bad today was?

I'm still hopeing that once this merger is done, then we might see the share price begin to go in the right direction.

I assume the news today was good?
It didn't really mean much to me.

 

[So_Cynical]

Just spent the last hour looking at intrepid and emperor.

1. Lots of money.
2. 100% un-hedged.
3. Debt free.
4. 1 (med) producing mine and 1 open cut (cheap) in the last stages of dev.
5. Lots of leases etc with good potential.
6. value share price/s

 

[Go Nuke]

So whats with the big volume of late?

Any ideas
Guess it could be based on soom good news regarding the merger ?

 

[Go Nuke]

According to the IAU website there are some updates on both the exploration in Mexico and drill results from Argentina due out this month!

Lets hope its the turn around for Intrepid.

Sellers are drying up, though I'd like to see more buyers coming in. Though who could blame them for NOT comming in yet with the way the sp has been over the last few months.

At least its good news for gold today with the yellow stuff reaching an intra day all time high i do believe

Here's the website if anyone is interested.
The Dec 11th update is where you will find the info on whats coming up.

http://www.intrepidmines.com/html/news_releases.html

 

[So_Cynical]

Intrepid closed at 34 cents today, so a great day for people like me who got in at 24 just a few weeks ago..

Intrepid has so much going for it as i posted previously.

IAU go u good thing.:bananasmi

 

[travwj]

IAU- Intrepid mines

Hello people

I was wondering what you opinion was on Intrepid mines...they are currently trading around the .30 mark. The have a gold mine in WA and are in the process of opening another in Argentina...the Argentina mine has just been upgraded and they are expecting an extra 23% more gold from it.

Any advice or opinions would be great.

Thanks

Trav

 

[So_Cynical]

I hold IAU- Intrepid mines and recon they have a great future, in fact
i just cant see any negatives other than the risk of underground mining at
Paulsen's and the fact that they only have 1 mine...1 revenue stream.

After the merger is all done the new Intrepid will be cashed up
debt free and revenue positive with good ground positions in
Australia, Argentina, Mexico, and Indonesia.

Intrepids SP has never moved with the Price of gold, however im expecting that to change
after the merger is complete as they will be unheged and a pure gold play.

 

[Go Nuke]

That merger isn't due to be completed till about mid year is it?

I liked the announcement. Yeah the U/G bit is a bit of a bugger but at least they are using conservative figures with their gold prices ($650/oz)

Been alot more volume of late around IAU, but I think things might pick up when the merger is complete too.

 

[KKC27]

Currently, IAU has mark to market hedging loss of

(55214 OZs) * ($1000 - $627) = ~ AUD $20 millions.

What do you guys think?

Remember CRS and Sons of Gwalia??

 

[bvbfan]

Only an issue if they have production issues.

Newcrest had billions of hedging losses.

If you can work out the total amount of hedging in ounces to annual production anything over 25% would be a concern. Over 50% I personally would stay clear of, but then I've been anti hedging for 6 years

 

[So_Cynical]

3 month Activities report out today...some questions answered.

Operation
Gold production was 21,426 fine ounces, up 28% (prior quarter 16,690 ounces), representing the second
highest quarterly gold production on record.

Record spot price achieved post quarter end A$1,018 per ounce.

Record mined contained gold at 23,583 ounces.

Site cash costs reduced to $357 per ounce, down 16% (prior quarter $426 per ounce) offsetting a 5%
depreciation in the US dollar reporting currency

Finance
Gold revenue was $12.5 million up 29% (prior quarter $9.7 million)

Cash of $2.5 million at period end up 67% (prior quarter $1.5 million)

Hedge position rapidly declining (below 44,000 ounces at quarter end)

Exploration
Taviche (Mexico) drilling program 70% complete, awaiting final assays.

Paulsens underground resource extension planning has defined drill targets that will be tested in early 2008

Read the whole thing http://www.intrepidmines.com/pdf/financial_reports/QuarterlyActivitiesReport.pdf

 

[Go Nuke]

Anyone game enough to say that IAU might be breaking out?
A close over 28c would be very good!

Volume has been increasing over the last few months and the sp has been making higher lows with a heap more buyers than sellers lined up.

I guess its building up and getting closer to the finalisation of the merger.
With gold at record highs, the rise in the sp may continue

 

[So_Cynical]

Merger complete...nice new web site to reflect that..and full steam ahead
with the Casposo gold/silver Project in Argentina...and resourse expansion
at the "producing" Paulsens mine.

Intrepid is a debt free and Cashed up Gold producer.