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Message: 1 million ounces...
Magic formula:
1km strike + 1.5m width + 500m depth + 17g/t Au + 2.5t/m3 specific gravity = 1 MILLION ozs Au
Now consider the following:
"In our view, the discovery appears to have the potential to host a significant high-grade (>17 g/t or 0.5 oz/ton) ore body, or multiple ore bodies. In our valuation, we have assumed potential discoveries at both the Golden Mile and the Yellow Brick Road veins. If we assume a deposit with 1,000 metres of strike, a width of 1.5 metres, a depth of 500 metres, a specific gravity of 2.5 tonnes/m3, and a grade of 17.0 g/t, we can generate a resource of just over 1.0 million ounces of gold. To be conservative, we have valued the company on the discovery of 1.5 million ounces. Using a value of US$150 per ounce, these resources would be worth about $224 million, or $2.21 per share."
The 1M ounces they calculate above is based on just 1 vein... that's why they refer to 1.5 million ounces for both GM and YBR to be 'conservative'.
IMO looking at the most recent cross section of the GM... on average... we have more than the required 1km strike... we have the required average 1.5m width... we almost have the 500m depth... the only place we seem to be lacking is the grade... is the average grade for the entire 1km x 500m vein 17g/t Au?... hard to tell exactly but does not appear to be the case... whether or not the very high grade sections compensate for the areas of basically nothing?... you be the judge... could be close...
BUT... Since this report many new veins have been discovered... not just 2 anymore... these stacked veins also indicating high-grade shallow intersections... I have said this before... people need to remember KXL Hercules discovery is more than just the Golden Mile... we only ever see the cross section of the Golden Mile but there is a similar cross section for every other veins discovered... especially Bobby Ore... will each vein total 1 million ounces as suggested by initial National Bank Financial coverage report?... likely not... but will the sum of all the veins produce an estimate above 1 million ounces?... IMO based on the metrics above and results I have seen to date... there is more than a good chance...
FYI... some info re: Goldcorp's pre-NI 43-101 buyout of Virginia's Eleonore deposit in March 2006 below... In March 2006 gold was trading at just $600-650 per ounce... i.e. half the price today... gold price up 100%... costs have not risen 100% over that same period so metrics likely more favor seller as opposed to purchaser IMO.
red911
bearlybullish wrote: "Someone was questioning him on why the company was not more focused on defining a resource and Brians answer was that we need to keep in mind that a lot of their peers as well as some of the bigger players (his words) are circling this play and it is really important that they find out as fast as they can just how much they have." "He referred to the example of Virginia mines selling to Goldcorp without a defined deposit." ------------------------------------... Very interesting comparison... FYI... Virgina sold their Eleonore project (a similar exploration stage (i.e. "a major new gold discovery") to Goldcorp for $406 million in March 2006. Goldcorp released an initial mineral resource calculation on June 25, 2007... 1.8 million indicated and 0.9 million inferred Au oz's using a cut-off grade of 3.5 g/t Au (i.e. ~2.7 million oz Au)... in March 2006 gold was trading at ~$600-650/oz... National Bank's recent $224 million estimate of the value of Hercules was based on (very conservative estimate IMO) 1.5 million Au oz's at 17.0 g/t... Both valuations are using the exact same metrics (i.e. $150/oz Au) to calculate deposit value... yet gold is trading at ~50% higher price than it was when the Eleonore project was valued in 2006 (costs have also risen but not 50%). In addition, another Hercules +ve is that it would seem to have a much higher grade than the Virgina's Eleonore deposit. This comparison would seem to support the view many have shared here re: National Banks valuation of Hercules is indeed very conservative. If (when) KXL manages to boost the accepted quasi-'resource estimate' to 3 million, 4 million, 5 million+?!... using the Virginia/ Goldcorp Eleonore example... IMO we can expect (using conservative estimate of $175/oz Au) to see offers in the range of but at least $525 million, $700 million, $875 million, respectively (i.e. $6/share, $8/share, $10/share), for Hercules project alone... this does not include entire massive land package. If you have the money all you need is time. Very exciting times ahead. Enjoy these times... if you are in at these levels, plays like this do not come along often. red911Re: Van. Presentation
in response to Van. Presentation by bearlybullish
posted on Jun 17, 08 04:19AM
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