Diamond Development & Exploration

Baffin Island, Nunavut ♦ Manitoba ♦ Northwest Territories

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Message: Hi Ekim

Not sure if I quite understand your question.

De Beers did an internal study for Peregrine Diamonds that would have included development estimates, capital costs, milling size, road options, etc.

They didn't have the valuation of CH-6 at the time..but that doesn't stop PGD from inserting those numbers as well.

Kaiser has posted some numbers and I've tried as well...but very preliminary.

CH-6 are pretty much well known now. Don't see any dramatic changes to the valuation model even with this bulk sample. CH-7 does make a huge difference. It does have a higher % of White diamonds and came up a 6+ carat stone in a 50 tonne bulk sample. Not sure if anyone has tried to model that original mini bulk. They will a significant number of carats from CH-7 and hopefully some decent stones in the 3 to 10 carat range.

Size and a higher percent of whites and CH-7 could exceed the valuation of CH-6 per carat. CH-6 will still trump CH-7 because of the Grade difference between the two.

So, they may have an answer on CH-7 within 40 to 50%, but that is a pretty large error of margin. Hence the bulk sample drilling this year. With those valuations, that answer will be probably within the 10 to 20% as you have indicated.

CH-7 is the material factor in firming up the NPV on Chidliak. IMO, Chidliak will have a decent NPV with CH-6 on its own. CH-7 firming that up will add so much more oomph to the project both in NPV and more importantly, mine life.

Not sure if that answers your question.

A confidentiality agreement between the whoever PGD may or may not be negotiating with may give that entity access to the study by De Beers or at least the estimates from that study...and leave it up to that entity to do the math.

EKIM

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