News: WGX Westgold Resources And Karora Resources Agreed To Combine In A Merger, page-18

This deal must be a belated April Fools joke, only 1 week late.

Money of Mine guys got this deal right - and I could not believe that WB would be so stupid, but I was wrong.

WB can not manage his current low grade mining operations to generate a reasonable profit, so what hope is there for him to manage an even larger set of low grade mines/mills to provide profits for the 100% increase in shareholder numbers.

I have sold down a bunch, but not all of my shares. Best to waite and see how things pan out before buying shares again, it seems. The deal is obviously a massive transfer of value from WGX shareholders to Karora shareholders.

As others have noted, there is fictitious "savings" being mooted from the merger, which is very disappointing to see from WB. Karora has plenty of resources but only a smallish level of reserves in relative terms to be a 160k pa producer on an ongoing basis.

Note the break fee of $45m which tells you how eager the Canadians are to get out of their crappy assets, and ensure they extract value out of us in case the deal does not go ahead.

We are going to get a stinker of Q3 report later this month, and the forward guidance implies that the Q4 report could be even worse, if they only produce at the lower guidance of 46k ounces. Obviously something is pretty seriously wrong with WGX and the only thing saving the company is the high gold price.

GLA

loki