Interpretating the NR
posted on
Dec 10, 2007 09:59AM
Black Horse deposit has an Inferred Resource Now 85.9 Million Tonnes @ 34.5%
I interpret this as our confirmation that the 'KWG portion' of 'KWG/Debut Diamonds' will pursue an active partnership in their McFaulds JV.
Under their present JV agreements with SPQ, they are required to contribute $x.xx per year to increase/maintain their ownership of mineral based claims. As KWG was inferred to have a lesser ownership of Mineral based claims, it seems to me that the market may have dismissed KWG as being a lesser stakeholder in the claims as well (which is not the case).
The purpose of the Diagnos survey appears to be two-fold. #1 It should provide high-priority targets for KWG and JV, and #2 Since the survey covers a broad area, the cost may be distributable amongst all respective JV agreements (fulfilling KWG's contribution mandates to operating expenses on respective JV).
So, this seems as much long-term foresight as it is short-term strategy. My question, however, is where does Spider fit into the new JV agreements with Diagnos? The answer to this may be of significance...
I continue to suspect that the KWG portion of the KWG/Debut entity may trade at a discount relative to Spider once the Debut D. dividend is released. Once the initial shareprice for Debut is revealed, it should be a quick process to analyze both sides of the split for value-based opportunity.
The tape may evaluate KWG differently than the Investment Bankers who are drawing a line through the company... the disadvantage of this is that market realized value on one side may simultaneously devalue the other, so the gain/loss may offset one another unless the portfolio weighting of each equity is adjusted.
Cheers~