After reading and re-reading the Big Score, there is much DD material in here. Here are some of the In-Situe valuation models used in the negotiations:

When Inco first started negotiations with VB the current model was yielding 70Mt of ore. Now the grading is not available here except for the few holes that were spectacular, notably 1, 2, 7 and 202. So for discussion purposes here, I am going to use 2% Nickel equivalent to encompass the Cu and Co. If someone else has a more precise number, please forward it. I personally think this number should be slightly lower but have nothing to work with on this. So by this model, with a 4.3B price tag, the original In-situe value would be

4.3B/70Mt*2000lbs/t*.02%*$3.80 for 40.4% In Situe Value

Now when Falconbridge came in with their offer of 4B $, they had an estimate of 87.8Mt, using the same formula as above, this yielded an In-situe value of 30.0%.

However, when the final price of 4.3B was agreed upon, the number that Inco was using was 131.7Mt of ore. It is not written what VB estimated the deposits to be and this was pre NI 43-101 so there was no such clear answer as to what the tonnage was.

Once we use the 131.7Mt of ore at a 2% Ni equivalent, the final In Situe value for VB at 4.3B $ was only 18.7%.

So I believe in looking at a Major buying out Noront, with our grade, we should be no less than 18.7% and possibly up to 30%. However, higher In -Situe value I believe are unreasonable judging by the VB story. Robert Friedland was very astute in getting such a rich price tag and so I believe we will not see something higher than this for In-Situe valuations. The only reason we may see slightly higher is if our grade continues to be as high as we expand our tonnage. Then maybe we can justify a little more.

Now Inco debatted furiously amongst itself as to top the Falconbridge offer of 4B$. The discussion that cemented the descision to move forward with a higher bid came from this explanation from page 304:

In 1995, McDougall explained, it had cost Falconbridge $1.60 (US) a pound to produce nickel. By comparison, Inco's average cost was $1.75. Once VB began producing its rich ore, Falconbridge's average costs would plunge to 90 cents a pound. With its 25% stake in VB, Inco's costs costs would fall only to $1.45 a pound. For the first time in its existence, Flaconbridge would be producing nickel at substantially lower costs than Inco, 55 cents less.

This scared Inco into coming up with a better offer.

So these high grade of nickel ranging from the 3.36% to almost 4% permitted whom ever was mining it to do it very cheaply because of the grade. Since the grade on our somewhat small deposit so far is almost double the grade at VB, this should enable the Major that buys us out to significantly lower their production cost and reap major profits. Now our small body of 5-7M tonnes will not yield enough tonnage to justify a mine. The question of course remains, is there more deposits out there? What grade will they be?

Well hole number 7 from the Ovoid was almost 4% vs hole #202 from the Eastern Deeps was 3.36%. The ranges here were similar because they were from the same source. I believe our small deposit has friends and a mother, all from the same source, so the grades may be consistent for Noront as well. If this is the case, then maybe we can talk of In-Situe Values above 30%.

Warmest regards to all,

Glorieux