DEG - Expect news on Thursday, page-21

A takeover at $10 billion is far too cheap. That is only $8 a share and I have to ask if that price would make Rick Rule laugh. That price would be fair if there were only 10,000,000 ounces of recoverable gold in the deposit. I think that we all know that there will be far more recoverable ounces in Hemi and the other intrusions at Diucon and Eagle alone. There is no allowance for the possibility of the discovery of another Hemi.

Given what was said to Rick Rule I would expect nothing less than $20 a share for De Grey at this stage and probably higher if two or more majors are bidding against each other. Your first option was much better for an opening offer. It comes close to $4 per share special dividend plus still holding 50% of a fully funded and developed tier one producer with the 50% of the blue sky still in our pockets. I would start to be interested at that price but I suspect that it could go much higher than even that, especially if the price of gold is moving back above US$2,000 an ounce and showing every sign that it will be heading towards the US$3,000 an ounce price level. As the price of gold goes up more ounces become economic to recover and that increases the actual number of real ounces in the resource. I don't think that we want to leave money on the table for free.

I like the way that the board are playing the MRE. They are not rushing it because if they release it with numbers that are too low the takeover bidding will be low balled by the majors. The majors are waiting for the MRE to come out and wisely so. That is because if they come in with an initial low number they will be blindsided by an MRE that shows they were trying to steal the company from the shareholders - and thus lose credibility as a serious buyer trying to deal genuinely with the owners. The board may well be dragging their feet on the MRE because the more that time passes the more that the resource increases in size owing to the very active drilling program. It is important to show that the resource is extended at depth as that will double the size of the resource without increasing the discoveries. So, lets see the results for more depth extensions in the MRE and hope that we get an announcement of the discovery of another intrusion system on the exploration tenement before the take over bidding commences.