possible takeover, page-7

Hope you are right but can't see it. PEM are cashed up with zero debt and therefore no servicing fees and have rescaled operations similar to what we have done to ensure no cash burn during down time in metal prices. In fact, by all accounts they are now in pretty good shape notwithstanding current metal prices - the sort of shape we would be in without the burden of some $200,000,000 in debt with no real option of repayment and the fact that we have, presently, a negative net worth on liquidation. Wish PEM had succeeded with their offer as their management seems to have done a better job than ours in placing them in a reasonable position in the downturn and are well placed to enjoy any upside.

The noteholders did not relent with PEM's offer nor are they likely to with any other offer because they simply do not have to. Our position during the failed merger was no better then than now and the noteholders did not budge. They can demand payment when due or simply takeover the company themselves and are highly unlikely to retain current management if they are left without full payment on their notes - can't see why they would reward a team that lost them a fortune!! Further why relent on a takeover when for ity to proceed they must be paid in full. I would hold out as well.

I think the reality is, we are stuffed.