Hi, Paul.

PE> PE>> I now have a letter (supposedly the second letter),
saying I can now
PE> PE>> exchange 15 PLP shares for 1 Placer Dome share.  Do I
want to do that?
PE> PE>> Apparently it is a "fair and reasonable offer".
 BFN.  Paul.

PE> FM> Placer Dome (ASX code PDG) have made a take-over offer for Placer

PE> Placer Dome is supposed to be a Canadian company, and not supposed to be
PE> capable of Chess, so it was only by fluke that I guessed that that's what i
PE> was, and where the 15:1 came in.  Anyway, all should be fine.

Placer Dome is a foreign company listed on ASX. Most (all?) foreigns are
not CHESS and I assume they aren't. The 15:1 should have been spelled
out in the doco you got, but legalistic requirements mean that that's
not always particularly clear unless you're used to reading such
documents.

PE> BTW, got LKO stuff today.  Looks like I have to pay $7000.  Is this
PE> why LKO is so low, because these new shares are a bargain?

The assets of LKO *now* are whatever oil prospects they have, and the
1/3 interest they will have in the new company. Shareholders of LKO as
at the "ex-entitlement" date (a couple of weeks ago) have the right to
take up shares in the new company. This includes you. Your entitlement
is 1 share in Gawler Gold for every 10 shares you held in LKO, with the
ability to "round up" to some multiple (check your doco). You get to pay
20 cents per share if you want to take them up, and this, if everyone
does, will result in (then) current LKO shareholders owning 1/3 of the
new company. The remaining 1/3 will be available to the public who will
also have to pay 20 cents. IOW, the deal for existing shareholders is
nothing special unless there is going to be strong demand, when you are
at least sure of getting your entitlement. It's certainly not as good as
I thought it might be.

Oh, you also get a 1 for 2 "free" option, but then so do the public.

According to my records here, you have 249,000 LKO. (FWIW I had about 10
times that.) You are therefore entitled to 24,900 Gawler at 20 cents,
for which you will have to pay $4,980. Where did you get $7,000? Are my
records wrong?

LKO's 1/3 interest in Gawler is difficult to value because we don't know
what the new shares will trade at. Physical gold was up another $2.40 on
Friday in NY, making ~$7 in a couple of days. This will increase the
value of Gawler and hence LKO. If Gawler finds something, that will
increase their value. If anyone in the Gawler Craton area else finds
something that will also increase their value.

LKO are currently drilling 2 wells at Lakes Entrance. They have had no
success with their earlier oil exploration, but Lakes Entrance is
certainly a more likely area, being close to Bass Strait where as you
perhaps know BHP sucks a lot of oil out of. I don't know when those 2
wells are expected to reach their target depth, but it must be fairly
soon. Let's hope we don't get yet another "plugged and abandoned".

What to do? I have my LKO on for sale at various prices between 5 and
about 8 cents. If gold continues to rise I'd expect to get some, maybe
all, of those sold. I don't really expect gold to have a huge rise from
here, not until later in the year. I think the European Union vote to
admit new members is due in November, but well before that those
countries who wish to join need to have their external debt reduced. It
is likely to have been selling of gold reserves by those countries which
has seen gold fall so far over recent months. So, say April for that
selling pressure to go away.

What to do on Gawler? I'd like to see if we could get an indication on
public (and LKO shareholder) demand for the stock before making a
decision, ie leaving it close to the last minute. One encouraging
thought is that both issues are fully underwritten by ANZ McCaughan, so
they will be pushing the stock and, one would expect, supporting it in
the market in the period immediately after they list. If the stock lists
at 16 cents the options are likely to be 8 cents which is break-even (16
plus half of 8 (it's a 1 for 2 option) makes 20 which is what we will be
paying). Anything above that is profit, and you may want to consider
whether you want to sell at some price above that in the first day/week,
or hold on the prospect of a) gold going up, b) Gawler finding
something, or c) someone else finding something.

AAMOI you are the second client who has told me he's got his prospectus
for Gawler; I haven't got mine and neither (as at Friday) had some of my
other clients.

Regards, fIM.

 * * Inquiring minds totally ignore liberalism!
@EOT:

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