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Desert Sun Warrants - What To Do?

Dudley Baker
PreciousMetalsWarrants
March 14, 2006

With the recently announced acquisition of Desert Sun Mining common shares and warrants by Yamana Gold many investors are left wondering what to do. Based on the press release dated Feb 22, 2006, we offer the following advice.

First of all, any investor holding either the common shares or the warrants should be very happy with their gains (See the charts, below). But investor face several choices going forward.

To recap the above charts:

  High Low % Gain from low
Common share price: $6.35 $1.30 388%
Warrant price: $3.94 $0.47 738%

Leverage: 1:1.9 warrant over the common shares (almost a 2 to 1 difference).
(This is the reason savvy investors are interested in the warrants)

The Desert Sun Warrants would become exercisable for Yamana Gold shares at an exercise price of C$4.17 and be entitled to purchase .6 shares of Yamana Gold until 20 November 2008.

So, let's keep this simple:

1. The deal is not done, until the deal is done perhaps another buyer comes in at a higher price? Perhaps a cash buyout instead of this stock swap? We have no reason to suspect this transaction will not go down as announced but we should consider all options.

2. With the deal as it stands the common shares and warrant holders are currently subject to the price fluctuations of the common shares of Yamana Gold, T. AUY.

3. Warrant holders (in my opinion) could do one of the following:

a. Sell your warrants and book your profits and reinvest in other mining shares or warrants.

b. Hold for awhile to see if another higher offer is made.

c. Just hold the warrants which will become exercisable into Yamana Gold shares (see details above).

d. Sell part of your warrant holdings and play the 'new' warrants with Yamana Gold.

All of the above are good choices and all investors should be happy will the gains to date on the common shares and warrants of Desert Sun Mining.

March 14, 2006
Dudley Baker
Guadalajara/Ajijic, Mexico
email: info@preciousmetalswarrants.com
website: www.preciousmetalswarrants.com

Dudley Baker is the owner/editor of Precious Metals Warrants, a market data service which provides you with the details on all mining & energy companies with warrants trading on the U.S. and Canadian Exchanges. As new warrants are listed for trading they alert you via an e-mail blast. You are provided with links to the companies' websites, links to quotes and charts, tips for placing orders and much more. Precious Metals Warrants do not make any specific recommendations in their service. They do the work for you and provide you with the knowledge, trading tips and the confidence in placing your orders.

For those investors seeking more knowledge on warrants do visit the Learning Center at Precious Metals Warrants, where you will find much more information and examples to enhance your learning experience. You may also sign up for The Warrant Report free weekly email.

Disclaimer/Disclosure
PreciousMetalsWarrants.com is not an investment advisor and any reference to specific securities does not constitute a recommendation thereof. The opinions expressed in this report are the express personal opinions of Dudley Baker. Neither the information, nor the opinions expressed should be construed as a solicitation to buy any securities mentioned in this Service. Examples given are only intended to make investors aware of the potential rewards of investing in Warrants. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions involving stocks or Warrants.

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