One Step Ahead

[Ignutz]

A comparison …

SUBJECT: Fun with numbers...Ekati/Shore Posted By: Werner_k
Post Time: 12/13/04 16:52

I suspect the interplay between grade, stone size distribution, average carat value, and their respective impact on project economics is not fully understood by many who read this and the KRT thread. With that in mind, I hope the following simple comparison of potential outcomes at Star vs Ekati helps in some way:
Lets model 1,000 tonnes of processed kimberlite from each project. What will we find?....

Ekati:
With a grade of approx 1ct/tonne we will find 1000 carats about 25% of which will be gem quality, so 250 carats of gems (the non-gems add very little value). Of these, since Ekati produces a +1ct stone about every 25 carats, 10 of them will be of that size or bigger. It is important that I point out here that at Ekati 80% of the value of their production is contained in the 'gem'-stones larger than 1ct.

Star:
With a grade of .15ct/tonne we will find 150 carats about 75% of which will be gem quality, so about 112 carats of gems. Since the Star produces a +1ct stone about every 6 carats of production, we will find 19 'gem'-stones larger than this size, fully 90% more than in the same quantity of rock up where the reindeer roam.

Since the +1 carat gemstones comprise nearly all the revenue from Ekati I am often suprised to find that people still question the potential economic viability of a project where you can recover twice the quantity of the most valuable stones at about one tenth the cost due to the favourable geographic location.

It's not as complicated as most people think.

Cheers

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