re: Wasserman Morris report
in response to
by
HIGH-GRADE NI-CU-PT-PD-ZN-CR-AU-V-TI DISCOVERIES IN THE "RING OF FIRE"
NI 43-101 Update (September 2012): 11.1 Mt @ 1.68% Ni, 0.87% Cu, 0.89 gpt Pt and 3.09 gpt Pd and 0.18 gpt Au (Proven & Probable Reserves) / 8.9 Mt @ 1.10% Ni, 1.14% Cu, 1.16 gpt Pt and 3.49 gpt Pd and 0.30 gpt Au (Inferred Resource)
Message: Pressure
Would this be appropriate to say that main reason Noront has two (2) drills on-site on the DE discovery is to comply as fast as possible with the Wasserman Morris & Co Initiation Report on page 15: Valuation. ?
“Noront’s ultimate valuation depends on the extent of actual reserves and resources within itsproperties. However, no estimate of reserves or resources is currently available. Moreover, thevolatile nature of commodity prices lends further uncertainly to a potential valuation.Valuation based on market reaction (in the absence of a resource)In the absence of an independent resource calculation, it is possible to extrapolate the value ofNoront’s Double Eagle project by using the historical trading value of the company’s shares.Upon announcing Noront’s high grade gold discovery at Windfall Lake in December of 2006, thecompany’s share price traded in the CAD $1.00 range. The company had about 90 millionshares outstanding then and therefore a market value of about CAD $90 million. Since thediscovery of the Eagle One zone, Noront’s value has increased to a current market value ofCAD $466 million, therefore, the Eagle One discovery of the Double Eagle project is valued bythe market at approximately CAD $376 million.As previously discussed, discoveries similar to Noront’s Eagle One discovery often occur inclusters. If Noront was to encounter another deposit of similar size and grade to the Eagle Onediscovery, such a discovery could add another CAD $376 million to the value of the company fora total value of CAD $842 million or CAD $7.13 per share.” continues with this: “Valuation based on a resourceExploration companies are typically valued based on a percentage of the total value of the metalin the ground or the “in situ value”. The percentage depends on the likelihood of the depositbecoming a mine and the likelihood of further discovery. Inco paid 40% of the in situ value whenit bought Voisey’s Bay from Diamond Fields in 1996 for CAD $4.3 billion. Ten percent of in situvalue is a good rule of thumb for major discoveries not at the bankable stage that have a robustgrade and sufficient tonnage to justify a mine. This percent of value can significantly increase ifthere is a high probability for additional discovery, the “blue sky effect”.The company has commissioned P&E Mining Consultants Inc. of Brampton, Ontario to calculatea resource figure for the Eagle One discovery. It expects to receive the resource report in early2008.If Noront were to release a resource of 7 million tonnes grading 3% nickel equivalent(approximately US $800 per tonne of rock at current nickel prices) the in situ value of themineralization would be CAD $5.6 billion. Noront could be valued at CAD $560 million or CAD $4.75 per share (10% of in situ value). If additional mineralized bodies are discovered, the value of Noront would increase in advance of updated independent resource calculations because of the blue sky effect.As mentioned, Inco paid 40% of the in situ value when it bought Voisey’s Bay from DiamondFields in 1996. Using the 7 million tonne scenario, the takeover price of Noront could be as highas CAD $2.2 billion equivalent to CAD $18.64 per share.No estimate of reserves or resources has been issued by the company.” Very conservative point of view ….the good news is that we are getting there!
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