Hello all,I'm still undecided upon the merits of the...

Hello all,

I'm still undecided upon the merits of the merger.

Positives:

- essentially doubled gold resources + reserves
- will possibly make UML a 100k producer in the next few years
- CRC seemingly cheap based on inability to fully finance through to production

Negatives:

- Dargues Reef will require 13 months from start of construction before first production (see UML presentation p. 15) suggesting first gold will probably not be produced before 2014
- significantly damages our cash position, as a few other posters have stated, any chance of dividends is now off the table for several years, plus buyback will need to be canceled
- as Samscout said, with the added debt we will have gone from almost cash backing to a much higher risk play, not necessarily a bad thing if risk vs. reward are successfully managed
- this jeopardises our ability to acquire (or just fund) goldstone if they make a major find, or want to put Homase/Akrokerri into production - I had assumed from their previous announcements that Goldstone and Africa was where our expansion would come from

I sold out this afternoon, not because I necessarily think the merger is bad for UML, but because I, like a couple of others, am concerned by the forecast cash at $39 m. This represents a $5.3 m from the end of june. Going off last quarters exploration + corporate costs ($7 m) this implies Henty's net operating profit was only $1.7 m. Based off previous production results and an average gold price for the quarter of $1600 this would imply (to me - and only a guestimate) production of between 7-10k oz, likely near the lower end of that range.
If this is the case, they will undoubtedly be heavily reliant on success in the read zone to reach their 45-55k oz production target.

I am also worried by the discrepancies between gold produced and gold sold in the last few quarters. I assumed that they were holding extra gold for sale at higher gold prices, but their was no mention (that I could find) of gold stocks in any recent announcements.

Finally, I am not convinced the management of the company is of the quality required to maximise the potential of this merger, and Andrew McIlwain's recent record does nothing to ease my uncertainty.

I will be waiting for the quarterly to see if my suspicions are correct, and will possibly get back in if I like what I see.

Cheers