What would you pay for an Oreo?
You gotta love the double stuffed ones, and pass the milk please. : )
I scan much DD and try to find as many valid posts as I can, whether they be from frequent or infrequent posters.
The post of Dr.D's regarding valuation, (reposted by bluediamonds tonight), was the first of his that really caught my attention of what he brings to the boards. Last night, I was interested in narrowing it down to what to expect from the Oreo pipe and fit his theory. As you can see on the thread bluediamonds was kind enough to bring over, rather than the .5 carat/ton figure Dr.D used in his example, a likely range could be .16 carats/ton, to as high as .26 carats/ton.
I was able tonight to reference Debeers/Kensington's projections on their expected cost and profits from FACL, then apply it to our Oreo Pipe.
From Debeers/Kensington:
"Regardless, De Beers has made some early computer-modeled extrapolations of what the rock is worth.
A cautiously optimistic scenario for the 140/141 pipe suggests a value close to $150 per carat and a grade range of 0.20 to 0.25 carats per tonne. This translates into values of around US $30 per tonne but the early stage of evaluation makes grade and revenue calculations highly speculative. On the basis of industry-quoted numbers, Kensington estimates that operating costs could go as low as US $10 per tonne, making for gross profits of about US $20 per tonne. And with an anticipated daily rate of production of between 40,000 and 60,000 tonnes of ore from the 140/141 pipe, alone, that would make for significant cash flow. The prospect of putting other pipes into production could easily double or triple the mine's output.
However, the biggest criticism of the project to date has been the initial grades of the 140/141 pipe. Yet, a grade of 0.20 to 0.25 carats per tonne is actually similar to De Beers' wholly-owned Victor pipe in Ontario, which is tiny by comparison. Nonetheless, it is expected to be a full operational diamond mine by 2006. Admittedly, the rock value for the Victor pipe is projected to be a much higher US $60 per tonne. Having said that, it needs richer rock as it is only 1/37 of the size of the 140/141 pipe and would be more expensive to mine from an engineering and logistical perspective.
De Beers' modeled values for macro diamonds from kimberlite 140/141 also range from US $20 to $220 per carat - a wild variance suggesting the need to do more systematic bulk sampling in 2003. However, core drilling in 2002 has shown several new phases of kimberlite and an increase in geological complexity from that seen in previous drilling. Continued bulk sampling of these new areas of kimberlite could reveal a number of enriched zones in the body (pipe)."
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So we see that .20 to .25 carats per ton is consistant with the .16 to .26 carats per tonne from Shore Gold's Star Mine. Thus, the numbers Dr.D., I and others hashed out last night as it relates to his theory are correct. A range of .16 to .26 carats/ton is a fair estimate to apply to his theory. So basically, divide his figures by 2 or 3. Whichever, the numbers are still impressive.
We also see Debeers/Kensington estimates profit at $20US per ton of ore.
I have my own belief and basis on valuation which differs a bit from Dr.D.
Let's see how this all fits in our Oreo...
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Dr.D. assumes in his post the entire 16 billion tons will be mined. Respectfully, I just don't see it that way. I would think the amount mined would be substantial, but much less than every square inch in our pipe. I'm going to use 5 billion tons mined as a conservative, and more feasible target. This is less than 1/3 of the 16 billion, and yet will still clearly illustrate our potential here.
Use the $20 per ton profit from Debeers/Kensington's estimate, what do we get?
5 billion tons mined * $20 profit per ton = $100,000,000,000 profit
$100 Billion Dollars!
That's from 1 pipe...one dunkable oreo.
And we have many more where that came from. 108 to be exact.
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Also, did anyone else notice we will be getting other results from Carolyn soon? : )
Again, these were test drillings.
From these or from any other test drillings, we simply need to see results that geologists state that bulk mining can begin to occur. I know I sound like a broken record on this point, but I'm not seeing it anywhere else. I feel it is vital to have the market and investors in tune with expectations, and not repeat the past. Test drillings that we have been doing involve small boare at ~2.5 inches. Bulk mining that Shore and Debeers are doing at FALC involve 24 inch and 36 inch bores. Hopefully our news will be such that additional testing or bulk mining efforts are in our future as well.
Be well, Bo
