If they make a move on BSR it will not be until after the...

If they make a move on BSR it will not be until after the de-merger at MDL, which is to take place at the earliest late this year.

MDL already have around 630 million shares on issue (fully diluted) and it looks like there will be more issued when they list in North America as a separate company.

At present MDL do not have a lot of cash, so how would they fund a takeover of BSR except via the issue of their own shares, which at the current MDL shareprice would be very dilutive.

MDL's main problem is its hedge (ending February 2013), which needs to be paid out. There will be a shareprice rise when the mine capacity doubles mid 2011, but that will not have such a big effect on the share price as the expansion is already priced in to some extent. Perhaps once it is listed in North America it will attract a much higher multiple on future earnings than it does in Australia. If that happens they could do the takeover over of BSR at a more reasonable cost. Some further shareprice gains could also be achieved by MDL if they can significantly upgrade their JORC reserve/resource, and I note they have restarted their exploration effort.

In the meantime I think BSR has to work hard to find the gold that is supposed to be out there and prove up a 1 million plus reserve. When it does that we will see much better prices.

I would not have bought BSR except for the fact that it has a small alluvial deposit that I think will provide the funds to find a useful JORC resource/reserve without (hopefully) further significant shareholder dilution.

I would be interested in people's views on how long that might take. An AMX they are not. I am surprised BSR's shareprice ran to over 40 cents/share. A share price of 20-25 cents per share is more realistic given what it has achieved. This could change quickly.

My 1 cents worth on BSR.

loki