BERAL, INC.
Andrew Racz
Director of Research
300 East 54 Street, Suite 26C
New York, NY 10022
Phone: (212) 319-6949
Fax: (212) 753-1944
E-mail: mlikar@aol.com

Tagish Lake Gold Corp.

November 1, 2007

Price:   $C 0.15

Price Range (2007):   $C 0.68 – 0.10

Debt:    $C 1,500,000

Stockholders Equity:   $C 22,500,000

Shares Outstanding:   115,400,000


Interview with Robert Rodger
Tagish Lake Gold Corp.

Interview, Tagish Lake Gold Corp. on October 1, 2007.


 

Gold,
end-Sep
(Tonnes)

Sales so far in EGA II (Tonnes)

Possible
sales in
2007/ 2008

Possible
sales in
2008/ 2009

Possible
gold end -EGA II

Germany

3,415

16

 

 

3,415

France

2,643

363

114

114

2,416

Italy

2,452

-

 

 

2,452

Switzerland

1,178

241

138

 

1,040

12 Others Combined
(Netherlands, ECB, Portugal, Spain, Austria, Belgium, Sweden, Greece, Finland, Ireland, Slovenia, Luxembourg)

2,743

747

191

239

2,308

TOTAL

12,426

1,367

443

353

11,628


Tagish Internal Projections

Annual Production

 

2010

2011

2012 

2013

2014

 

Gold @ $800,
Silver @ $15

Gold @ $1,000,
Silver @ $17

 

50,000 oz gold

40 M

40 M

 50 M

 50 M

65 M
(65,000 oz)

1,000,000 oz silver

15 M

15 M

17 M

 17 M

20.4 M (1,200,000 oz)

totals

$55 M

$55 M

$67 M

$67 M

$85 M

We are talking in five years, a revenue stream of $320 M,
a net cash flow of over $100 M.

RODGER:   That's exactly right, yes.

RACZ:   Now, are there many deals like that in the business you are in? A company or an individual comes to you with a check, I give you the money, but I get half, or one third, or whatever in return. Do you hear about deals like that often?

RODGER:   Well you hear of deals. You hear of companies that are being acquired all the time because they are perceived to be bargains.

RACZ:   So, in other words we are in a level when companies like yours get take over offers, maybe not at $20 million, but say at $30 million you make some money, but the cash rich partners eventually make a lot more money.

RODGER:   That's exactly right.

RACZ:   And these kind of deals you have seen?

RODGER:   We've seen deals of companies taking over other companies, yes, at rather premium prices these days, frankly. For the most part that action has been among producers, but I think that sort of thing will filter down to

RACZ:   You have seen this kind of deals among producing companies?

RODGER:   That's right, yes.

RACZ:   But the real business of takeovers, partial, full acquisitions for the explorations has not as yet begun?

RACZ:   So, $5 million would accelerate working towards production and would give a higher value of your deposits.

RODGER:   Yes, exactly, because with that $5 million, we'll demonstrate that zones continue down into the mountain and also continue further into the mountain.

RACZ:   At the moment, the market values your deposits at a very, very low level. So, you have to create money and you have to create credibility that this is a company that's going to be a decent sized gold and silver producer.

RODGER:   I think that's right, yes.

RACZ:   So, if you get a few million dollars and you go along this line, the likelihood is that another company will come along and make a deal with you.

RODGER:   It certainly could happen, yes.

RACZ:   And that's where we are going now. That's where you want to go now?

RODGER:   Where we want to go is move to production. If somebody comes and makes us an offer for the company and the offer is attractive, we'll certainly take a look at it, but our focus is on moving to production. And with the kind of gold and silver market that we have, we shouldn't be going any other way.

RACZ:   So, basically, and I'll close with, you have every intention, but you haven't thought about it to read the books of William Zeckendorf and look it up, how did the master do it? Because William Zeckendorf had no more money than you have, and whatever way you look at it, he built the United Nations Plaza.

RODGER:   Yes, that's right.

RACZ:   Well, since we talked about him, he went bankrupt, in the middle of his projects. Marine Midland Bank put him into bankruptcy. He was a very colorful man, everybody knew him in New York. I don't know why I had a fascination with him when I came to America. He wrote a book that said at the beginning "Many people thought I would commit suicide." He said, "Nothing can be further from the truth. My sense of accomplishment is perfect." So, the difference between the two of you, you never talked to me about suicide, but you want to see your sense of accomplishment displayed on the broad tape, correct?

RODGER:   You're absolutely right. I certainly expect that moving Tagish to production will give me a sense of accomplishment.

RODGER:   Yes, I think so, I think the time is coming for people to look at companies such as Tagish Lake Gold, which has three deposits on this property and is moving to production. In other words, they'd be looking at advanced mineral exploration companies among the juniors.

RACZ:   Referring to the last 10-15 years, did the major companies neglect exploration?

RODGER:  I think as a general rule in the whole mineral industry, exploration was neglected, and we're paying for it today.

RACZ:   And this was simply an unnecessary neglect?

RODGER:   No, I think it was more related to commodity prices. Commodity prices were all very poor right across the board, including gold and silver. And, as a result there was little incentive to do any work in exploration.

RACZ:   Well, let me ask it this way—what's the difference for an exploration, whether the price is $650 or $850?

The gold price is now at $780/oz, suggesting that demand remains high. When the Agreement was signed in 1999 the price was under $300/oz and market conditions were much different.

RODGER:   The fact that the company producing is actually ultimately much more profitable at 850 than it is at 650.

RACZ:   But an exploration company gets a different valuation with the price increase, right?

RODGER:   I think that's very true, yes.

RACZ:   What is the market value of your company?

RODGER:   It currently is about $17 million, our market cap. The value based on other valuations is much higher than that.

RACZ:   And how much cash is in the company?

RODGER:   About a million dollars.

RACZ:   Ok, let's assume the price goes to $850, how would the market re-evaluate the company?

RODGER:   I think because we're a near-term producer there, we're going to see that people will see what the market will see that there is clearly an advantage to our company, and as a result, I think the price will move up, fairly significantly in fact.

RACZ:   Ok, let's backtrack a little bit. How much gold do you have which is near to potential, not only exploration, but production?

RODGER:   We have three deposits. The deposit that we've been focusing on to move to production is called Skukum Creek. We currently have roughly 300,000 ounces of gold in that deposit, and six million ounces of silver. Our projected annual production rate is of the order of 50,000 ounces of gold and of 1.2 million ounces of silver.

RACZ:   50,000 ounces of gold at let's say, $800 level, is $40 million, correct?

RODGER:   That's right, yes.

RACZ:   And a million ounces of silver at $15 is $15 million.

RODGER:   That's right.

RACZ:   So, we are talking about $55 million annual production and a market cap of less than $20 million.

RODGER:   That's right.

RACZ:   Now, can you retain or even increase, just retain this level of production for five years?

RODGER:   Yes, we currently have about five years resources secured, and we expect to increase that as time goes on, because our zones are wide open.

RACZ:   Fine. So, you are really talking about a quarter of a billion dollars as a revenue stream against less than $20 million market cap.

RODGER:   Well there hasn't been, or at least I haven't seen a whole lot of deals involved with companies that in the advanced exploration stage, but I think that's coming.

RACZ:   Have you ever initiated such deals?

RODGER:   In a similar fashion, yes. A number of years ago I worked for a larger corporation and we signed an agreement with a small company that owned a former producing gold mine.

RACZ:   Ok, but take an example right, and then I'll come to the main level, that a company comes along and it says, "I'll give you half a million dollars, and you give me shares, but I will get 10 percent of your gold production's net for five or ten years." You've heard of such deals or this is still in the future?

RODGER:   For companies at our level I haven't, but that certainly is the case with silver producers, more so than gold producers. There are a number of companies that are actively acquiring silver production.

RACZ:   Like Silver Wheaton?

RODGER:   Silver Wheaton is one, there are a few others. Silver Wheaton has signed deals with companies that are at an advanced exploration stage.

RACZ:   How many gold-silver exploration companies are in British Columbia and Alberta?

RODGER:   Probably a thousand.

RACZ:   So, we have a thousand companies, and would you say $20 million is the average market cap, or lower?

RODGER:   It's probably higher, I would think.

RACZ:   Higher? So, in other words, $20 million times a thousand is $2 billion.

RODGER:   Right.

RACZ:   So, what we are talking about is that in the current monetary markets, which are not exactly promising for currencies, there is a group of companies between $2 billion and $5 billion in total value that have not applied proper intelligent marketing of their assets and future production and. This is really the business, correct?

RODGER:   That's right.

Disclaimer

Information contained herein is based on data obtained from recognized statistical services, issuers reports or communications or other sources believed to be reliable. However, such information has not been verified by us and we do not make any representation to its accuracy or completeness. Any statement non-factual in nature constitutes only current opinions which are subject to change. BERAL INC. or their officers, directors, analysts or employees may have positions in the securities or commodities referred to herein, and may as principal or agent buy and sell such securities or commodities. An employee, analyst, officer or a director of BERAL INC. may serve as a director for companies mentioned in this report. Neither the information nor any comment expressed shall constitute an offer to sell or a solicitation of an offer to buy any securities or commodities mentioned herein. There may be instances when fundamental, technical and competitive opinions may not be in concert. This firm may from time to time perform investment banking or other services for or which investment banking or other businesses from any company mentioned in this report.

 

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Andrew Racz. 300 East 54 Street, Suite 26C, New York, NY 10022
Phone: (212) 319-6949 Fax: (212) 753-1944. E-mail: mlikar@aol.com

Copyright © 2011 Andrew Racz. All Rights Reserved.

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