my thoughts on gdo, page-2

Since researching GDO ~12 months ago it has been my number one recommendation to individuals that wanted to purchase a gold producer. What attracted me most was the unimpaired cashflow from ME (production and cost profile), the medium term production increases from VEN and MEG, and the long term exploration potential of Tulo and Mozambique. Significantly, earnings from ME could be used to fund medium and long term expansion without shareholder dilution. This would have created significant low risk shareholder value.

I feel this acquisition creates a significant amount of short-to-medium term earnings and company risk should estimated cost savings at Rand Uranium not be obtained, and the gold price corrects to ~$1000US; given the reported ~$210US million increase in debt. (I estimate the gold price is most at risk of a major correction within the next couple of years, prior to moving higher again)

In my view, this acquisition significantly increases GDO's reliance on third parties to ensure the company's success (uranium off take agreements particularly - I am aware of the Chinese), significantly increases their debt and made the company more vunerable to the spot gold price. Given these basic points I believe GDO has moved from "low risk - high reward" to "high risk - very-high reward."

Presently I am holding due to the strength of the managment team, however I feel the Rand Uranium transaction is a negative until a uranium coproduct is produced - even if spot gold stays above $1500US.