MiningJunkie writes:

"59$ insitu "in the ground metal value" MUST be discounted steeply to allow for mining costs and CAPEX."

Okay, if you look at my calculations below (bottom) posted a few days ago, I come up with back-of-the-envelope $6.3 billion worthy of ore extrapolating from what we know now about ore body (very little).

This is what I stated earlier:

"At any rate, I would argue that the 'deposit' has already taken on some 3 dimensional properties. We have a 500m geophysical anomaly, which was the drill target, that proved to be VMS mineralization. We also have a preliminary width of 50 metres based on holes #1 and #2 - the 50 m true width (of the orebody at that postion) was mentioned in the first or second NR. We also have a depth of around 100m based on the length of mineralization in hole #5, which was drilled vertically. Thus, I come up with 500m X 50M X 100M as a speculative sort of first guess figure for the dimensions of the orebody." 

So, if MJ wants to discount 90% of insitu to account for CAPEX and mining costs, then are you not essentially discounting to cashflow??

Thus, 10% of insitu value of 6.3 billion is 630 million... Divided by 120 million shares (there will be more as this advances), then you end with $5.25/share... CASH FLOW. Multiply this by 10 and you get $52.50 per share valuation for NOT based on WE based on our VERY LIMITED understanding of the orebody, which is interestingly simialr to what FJ came up with. What am I missing??

Honestly, I am not sure I follow you MJ on your valuation...

To me, what is interesting is that FJ came up with a very similar  valuation to mine using a different approach.

The bottom-line is that the real determinate of value is going to be grade. If we if play with the the deposit size estimates somewhat, but still within line of reasonable size assumptions given what we know at this juncture, we will still arrive at very similar valuations because we are using the same grade figures - and so far have much better understanding of grade. The grade is what is going to have a greater impact on valuation, assuming of course we do change the deposit size too much... Follow?

And it is only the total volume that matters - whether you believe it will be 30X 200X300 or 50X100X500 is irrelevant.

Okay, I've got my body armour on... Fire away. 

Posted by: Bentonstocks on September 19, 2007 02:21PM
In response to: REPOST: My back-of-the-enve... by Bentonstocks