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: At what point does our...
Net Present Value of the Gross Metal Value increase?
If we assume that 10% is presently being utilized (amongst other assumptions denoted in the following chart), then I would suggest that our current share price is not undervalued. Our current share price would be supported by an ore body of 8.0 million tonnes - with no speculative component included.
| NI Equilalent | 3% | ||||
| NI Price / LB. | $ 10.00 | ||||
| F/D Shares | 135000000 | ||||
| Other Properties | $ 1.00 | ||||
| Current Share $ | $ 4.85 | ||||
| Tonnes Ore | 4000000 | 5000000 | 6000000 | 7000000 | 8000000 |
| Nickel (tonnes) | 120000 | 150000 | 180000 | 210000 | 240000 |
| Buy-out Value | 10.0% | 10.0% | 10.0% | 10.0% | 10.0% |
| Gross Metal Value | 2640000000 | 3300000000 | 3960000000 | 4620000000 | 5280000000 |
| Share Price | $ 1.96 | $ 2.44 | $ 2.93 | $ 3.42 | $ 3.91 |
| W/Other Proper | $ 2.96 | $ 3.44 | $ 3.93 | $ 4.42 | $ 4.91 |
| Current Price | $ 4.85 | $ 4.85 | $ 4.85 | $ 4.85 | $ 4.85 |
| Speculative % | 64% | 41% | 23% | 10% | -1% |
However, if the NPV of GMV is increased to 20%, our share price supports a 4.0 million tonne ore body (again with no speculative component). This would also suggest that if our ore body is above 4.0 million tonnes, we are undervalued.
| NI Equilalent | 3% | ||||
| NI Price / LB. | $ 10.00 | ||||
| F/D Shares | 135000000 | ||||
| Other Properties | $ 1.00 | ||||
| Current Share $ | $ 4.85 | ||||
| Tonnes Ore | 4000000 | 5000000 | 6000000 | 7000000 | 8000000 |
| Nickel (tonnes) | 120000 | 150000 | 180000 | 210000 | 240000 |
| Buy-out Value | 20.0% | 20.0% | 20.0% | 20.0% | 20.0% |
| Gross Metal Value | 2640000000 | 3300000000 | 3960000000 | 4620000000 | 5280000000 |
| Share Price | $ 3.91 | $ 4.89 | $ 5.87 | $ 6.84 | $ 7.82 |
| W/Other Proper | $ 4.91 | $ 5.89 | $ 6.87 | $ 7.84 | $ 8.82 |
| Current Price | $ 4.85 | $ 4.85 | $ 4.85 | $ 4.85 | $ 4.85 |
| Speculative % | -1% | -18% | -29% | -38% | -45% |
The question for the board is twofold:
1) What do you feel is the current NPV of GMV being utilized?
2) At what point "should" this change? Is there a rule of thumb that can be utilized?
I recognize that there probably is not any deinative answers but I am hopeful of getting a better understanding through some meaningful discussion.
Cheers,
Milsy1
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