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The Gold Stock Strategist analyzes leading junior gold producers and major gold mining companies.

Comments are welcomed!

Thursday, May 15, 2008

Orsu Metals Update

I was asked in a comment about my current views of the new Orsu Metals (the name of the proposed merger between European Minerals and Lero Gold). Here is what I am thinking about the new company.

European Minerals has had problems in getting the resource into production. The resource is still there and worth a lot if managed properly. This one will hopefully work out eventually. Lero's management will run the merged company. I am encouraged by the Lero Gold management. They are experienced and have a track record of success.

One important question is whether the European Mineral warrants (A warrants in 2010 and B warrants in 2011) or the shares offer the best reward/risk ratio. At current prices, my sense is that the shares offer the best reward/risk ratio at current prices, exercise price, and date of maturity.

That said, I own a significant number of both A and B European Mineral warrants and am holding the warrants for now.

This one is an extremely speculative play and especially risky—it is not for the faint of heart.

Good luck to European Mineral shareholders and warrant holders on this one.

Best,

Gold Stock Strategist

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Full disclosure: I own warrants in European Minerals. The information provided in this post is believed to be correct, but not guaranteed. Investing in junior gold miners entails risks. Readers are responsible for their investment decisions. Do your own due diligence.

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