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Re: xcentrix post# 139688

Wednesday, 02/23/2005 3:39:39 PM

Wednesday, February 23, 2005 3:39:39 PM

Post# of 358440
From today's Shore Gold news release …

The modeled value is determined using statistical methods to estimate the average value of diamonds that will be recovered from a future mine on the Star Kimberlite based on the valuation of the 3,050 carat parcel at current diamond prices. The difference between the sample value and the modeled value results from under sampling of the top end (plus 5 carat) of the diamond size frequency distribution by the current bulk sample. The average modeled value of US$135 lies between a “minimum” of US$110 and a “high” of US$162. WWW believe it is unlikely that the average price will be lower than US$110 per carat based on current prices and that the “high” modeled value of US$162 is reasonable considering the potential value of the larger diamonds in the Star Kimberlite.

I have read this over and over. My opinion is that they almost ignore the 5+ carat stones to arrive at the $110 minimum, and include all 5+ carat stones to arrive at the $162 value. The "modeled" value is in between the 2 extremes. This approach is strange, as it would be comparable to throwing away the most valuable stones. It is a conservative approach to valuation, and it still moves us closer towards an operating mine. I would be worried if they did the opposite, and included all 5+ carat stones, and eliminated all stones under 1/2 carat, to skew the value up towards $200 per carat. You must realize that the 5+ carat stones bring the value of the 3,000 carat total up from $110 to $162, a $52 per carat, or 47% ($52/$110) increase in value.

It has been discussed often that the 5+ carat stones in Shore kimberlite will make a significant difference in advancing development towards an operating mine.

http://stockhouse.ca/bullboards/viewmessage.asp?no=9205635&t=0&all=0&TableID=0

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