I find that when I speak to people about the potential size of the Tesoro deposit, they have a very hard time getting a perspective of just how large this discovery might be, even after the third and fourth explanation. So I decided to make it a little more visual.

This chart shows some rough calculations, with a very conservative potential value per share, while looking at just the three (Chance 1, 2, 5) claims.

I’ve only used half the volume for the claim areas as it would be impossible to mine the entire area, as an open pit would be terraced down to the center. I’ve also used half of the volume of a cube for the ovoids area, which might be a little conservative. I used the total volume of the veins, however they have been reported to get wider with depth and richer in grade, the average bulk grade so far has been 0.93oz/t (28.83gm/t).

I wasn’t sure of the depth of the ovoid in my last post, but thanks to Sculpin and Hog they have clarified that the center of the Zona Central >18.5 milliradians ovoid is at a depth of 600M, and that Energold rig on site can drill to that depth. This means they will likely get up to 500m of ovoid tested, perhaps less due to the dip angle of the drill.

In my chart I used 1gm/t for the larger (>16milliradian) envelope which results in an insitu (in the ground @ $300/oz) value of $49Billion. To put that into perspective Barrick Gold Corp has nearly 1B shares @ $49, their market capital is therefore $49Billion. For every 1gm/t increase in the grade of the ovoid we are looking at an insitu value equal to another Barrick market cap.

Put another way if the ovoid has an average grade of 1 troy once (31.1034768gm) / tonne, it will equal 5 Billion troy ounces. That is almost equal to all of the gold mined in all of human history. Worth 8.5 trillion dollars @ $1700.00/oz., also keep in mind there isn’t enough gold to back all of the paper currency in the world.

Sculpin has also pointed out that with this type of deposit there is the possibility it could extend beyond the 1,500m we can see with the Titan imagery to a depth of 10,000m. And with depth the likelihood of higher grades.

If the drill results (expected soon), of the ovoid have a grade similar to Red Lake (26gm/t), which then could be extrapolated to the full known depth of the ovoid (1,300m). The insitu value would be such, that if we wished, we could likely do a relatively small PP at a price that would give us the capital required to acquire one/more majors instead of the other way around. Not that I would advocated that, but people need to be able to extrapolate and put into perspective what the results could mean, when the time arrives.

Personally, I have a hard time fathoming how this acquisition would be carried out on such a scale, should the grade be several grams per tonne. And I don’t think that it will be (1gm/t) as per the conservative estimate in the chart and hence the new team of Lawyers will have to figure it out.

I do however believe that it will not be a simple all cash deal with a subsequent one time dividend. I think there will be some stock (considerable stock, xx shares) in the acquisition/merger company, with other possible options. I like the idea of stock, I think there might be some tax benefits, but it would also allow us to benefit immediately from dividends in a producing gold company and ultimately from Tesoro, which I believe will become an extremely low cost producer, just at a time when gold will become the new currency of the world.

Barrick for example currently produces about 8Moz/yr. , they would be able to more than double that relatively quickly, considering that their current deposits are scattered around the world, while Tesoro is conveniently in one place (although that comes with some risks too). I chuckle when people talk about Dynacor increasing the capacity of their mill by 50 tpd, I expect the mill necessary to support Tesoro will eventually need to produce at least 20,000-30,000 tpd.

BubaBob.