here is my April 16 2008 take on kxl being like virginia. I am Shootfirst on SI, paperperson elsewhere. Michael

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Is Kodiak Exploration KXL a buyout candidate right now? This year? 2009?

If so, it might be worth considering how another hot Canadian gold drill play deal went down in 2006 -- Goldcorp's buyout of the Eleonore gold prospect owned by VIRGINIA Gold.

First, here is what is going on publicly with KXL.
KXL management is letting it be known that they are being courted by the majors. Here is how it was handled in this newly published piece linked from the KXL website.

http://www.kodiakexp.com/_resources/...

"Exploration & Processing Magazine: Risks Pay Off (March/April 2008)"

"With the success of the Hercules project (Kodiak Exploration president William ) Chornobay believes mining companies are watching Kodiak very closely as the drilling continues. 'We have barely scratched the surface, but the results from the Golden Mile have already captured the imaginations of miners and investors alike,' he says. 'If the exploration continues to produce positive results, there should be several parties interested in acquiring the asset.'

"Looking ahead, Kodiak intends to continuing to strengthen each of its three divisions: precious metals, base metals and energy. 'We are focused on our efforts to grow these divisions into three prosperous, stand-alone companies,' Chornobay says. 'We have generated multiple additional targets across our vast land holdings that remain to be tested.'"

Meanwhile, attendees at the Calgary mining show report similar statements, to the effect that majors are calling them but that they want to maximize the share price. Kodiak has previously reported that it intends to spin out three separate stocks as above.

They are on a fast track to prove out the gold potential at least in the Hercules area of the very large Beardmore-Geraldton tract.

The whole process is quite reminiscent of VIRGINIA Gold, in that management has plans for two other stocks besides the gold stock.

I looked up the old Goldcorp-VIRGINIA deal, as a harbinger of what is possible and how it can work out for shareholders in the exploration stock.

Keep in mind that VIRGINIA did not have a proven resource, just a lot of drill holes that came up GOLD.

The KXL play covers an even bigger piece of gold prospective land.

In March 2006, GOLDCORP completed the acquisition of VIRGINIA Gold Mines’ Eleonore project in Quebec, Canada. GOLDCORP issued 19.3 million common shares valued at $406 million. There was some grumbling at first, since this might not have looked very lucrative on paper.

However, the deal worked out very well for VIRGINIA shareholders.

The reason was that they received BOTH GOLDCORP stock and stock in the new VIRGINIA -- which held all the original properties minus Eleonore.

GOLDCORP agreed to acquire VIRGINIA Gold, keep Eleonore and spit out the rest in a newly capitalized VIRGINIA Gold.

VIRGINIA shareholders received 0.4 of a share in GOLDCORP common plus 1/2 share in the newly capitalized VIRGINIA Mines, which again was all the original properties in Quebec, minus the Eleonore prospect, which GOLDCORP is turning into a gold mine. Also, GOLDCORP became a stockholder in the new VIRGINIA, and the new VIRGINIA retains a royalty on the future Eleonore mine.

Here is how it looked to a VIRGINIA shareholder. GOLDCORP was selling at C33.51 on March 31, 2006, when the deal closed. For one VIRGINIA share, you received GOLDCORP stock was worth c$13.40 plus a half share in the new VIRGINIA.

Right before the new shares were issued, VIRGINIA was trading at c$15.75. I think mine cost me $6.00.

The new stock without Eleonore began trading April 5, 2006 at c$4.10 and hung around in the low c$4.00s, upper c$3.00s for a while. It is now closing in on C$7.00.

The best payoff was for those who stuck it out, took both the GOLDCORP and the VIRGINIA shares, and kept both!





Michael