Found this on SH:

The Next Big Thing

Bob Moriarty
Archives
Oct 3, 2009

I've been busy lately. I was in Peru 10 days ago and Canada a week ago. Today I'm leaving for the Balkan Boondocks. So PLEASE don't send email until 13/14th Oct.

When I was on the visit to Northern BC a week ago, a very sharp broker that I know suggested I watch a company named Richfield Ventures (RVC-V) closely. They are coming out with results right about now. I should have watched closer. RVC closed at $1 a share a week ago and $1.80 a share yesterday.

This is going to be one of the most convoluted pieces I have ever written and a true test of my ability to explain things clearly. It's going to be difficult.

First of all, there have been drill results released in the last two weeks that suggest the discovery of one of the biggest gold/silver discoveries in BC ever.

The overall project is called the Blackwater project and belongs to Richfield Ventures. Within the Blackwater project are two properties owned by different groups; the Davidson project, subject to a 75/25 JV between Richfield and Silver Quest Resources (SQI-V) and the Dave property that Richfield has a 100% option on.

Several years ago I outlined a process I go through to understand the potential of big drill holes. I call it cubing the hole. What I do is first figure out today's value of the rock. I'm going to use as an example the BW 46 hole announced by Richfield on September 21. First, go to the wonderful page set up by Doug Casey.

Feed in the values of 1.06 g/t gold and 5 g/t silver. I show a gross metal value of $36.77 but depending on when you do it, your numbers will be slightly different from mine. Now, you need to understand that that's a theoretical value for the rock. But you can't recover all of the metal so it's a limit on the high side. You will never get that much money out of this rock.

Then I cube the hole. Pretend the hole is vertical (which they rarely are) and it's just as wide and just as long. (Which they never are.)

Take the figure of 207.25 meters announced by RVC on September 21; multiply it by 207.25 and again by 207.25. I show the number of cubic meters as 8,901,918 if my calculations are right. But we need to add a factor for rock density. I'll use 2.5. That gives me about 22,254,795 tons of rock. If the value per ton is $36.77, multiply that out. That gives me a theoretical cube value of $818,308,812 for the hole.

That number is relatively meaningless because it's not a hard number at all. Holes are never as wide and as long as they are deep and you can't recover 100% of anything. But you can compare one hole to another. A cubed hole with a value of $818 million is what is called in the industry a "BMF" hole. It's giant.

Here's where we get really interesting. Hole BW46 is on the Blackwater project but not on the Davidson property. So it is of giant value to the RVC holders and only interesting to the SQI shareholders.

But let's go to the press release put out by Silver Quest on October 1. Hole BW48 showed values of 1.26 g/t gold and 5 g/t silver over 148 meters and bottomed in mineralization. That's $43.19 rock. When I cube the hole, I come up with a $350,032,491 hole.

Let's go into the gross metal value of a deposit and what it might be worth in market cap. I'm going to use as a rule of thumb everything from 1% of gross metal value to 10%. Any project that can be mined at a profit is probably worth a minimum of 1%.

Remember there are a lot of uneconomic deposits out there. You may have a billion dollars worth of metal but it's sub economic. If so, it shouldn't be valued very highly. When things are really booming and the market is hot, eager investors might fork over 10% of the gross metal value. That's rare and most of those investors are going to lose their shirts.

But gold in the ground for early exploration companies is probably worth $25 an ounce or 2.5%. So an $800 million dollar hole just added $20 million dollars in market cap to the company who owns it. And a $350 million dollar cubed hole can add $8.75 million in market cap. A billion here and a billion there and sooner or later you end up talking real numbers.

So here's how it works. Richfield Ventures has been drilling some homerun holes on the Blackwater project. Silver Quest will still end up with 25% of the Davidson project and it has some red hot holes on it. This is going to be a giant find, with potentially tens of millions of ounces of gold and silver.

Here is a map of the Blackwater project. The Davidson property is the part north of the east-west dotted blue line. All of the holes are part of the Blackwater project, many of them are part of the Davidson project so if you like BMF projects, you have the choice of investing in either of two companies.

Richfield has only 14.2 million shares outstanding. And better yet, only 5 million are free trading. So that's a tightly held stock and it could explode even from here.

Silver Quest probably has 18-20% of the total deposit so that's worth something. They have a modest 33.3 million shares outstanding with a market cap of only about $9 million. If they end up with 20% of a $8.75 million dollar hole, they are going to explode from here and they don't have to do anything. Richfield is doing the heavy lifting.

Richfield does not yet have an OTCBB symbol so I haven't listed one. I anticipate one shortly. Richfield is an advertiser. We do own shares. We are biased. It's your money, take some responsibility for your own due diligence.

Silver Quest is not an advertiser but they do have an OTCBB symbol so American investors can still invest in the project. If Silver Quest has any sense, they will advertise. And you may safely assume we bought some of them as well. After all, this really is the next big thing.

Richfield Ventures Corp
RVC-V $1.73 (Oct 2, 2009)
14.2 million shares
Richfield Ventures website

Silver Quest Resources
SQI-V $.28 (Oct 2, 2009)
SQIFF-OTCBB 33.3 million shares
Silver Quest Resources website

Bob Moriarty
President: 321gold
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321gold Ltd