Replies to post #44 on Chester Mining (CHMN)

[sanbrunobaby]

Look forward to your post.

Sunshine is much higher grade mine than the Galena, and much more room for adding resources.

Length of time of production from the Chester is an unkown due to the very nature of the Sunshine- i.e. it has a consistent history since 1884 of replacing reserves, and shows every indication of additional resources at depth. Of the five key target areas at depth ( see Sterling's former powerpoint) 2 out of the 3 were from Chester ground, and the third could be construed as Chester having APEX rights. The NI43-101 report showed 50 million ounces of resources on the Chester vein.

So how do you value all this ?

1. Market Cap per ounce of resource- not particularly precise but some analysts use, and because they use can determine the market cap value of a resource. ( same applies to reserves).
2 NPV/IRR- this of course more precise valuation, but for that normally you need to know various factors not always completely available to an investor.

The key factor that lead to Sunshines closing in 2000 was that management cut exploration and development, and of course low metal prices.A mine like the Sunshine needs to develop a new ore body every 5 or 10 years. They have the resoources- justneed to convert to reserves in an economic fashion.Therein is why they have to buy out Chester or control it- they cant leave some of the most promising areas of the mine under the terms of the current lease.

Sunshine Mining Company knew this, that is why they owned over 50% of Chester, then gave it away during their closing. De Motte at Sterling knew this, that is why he arranged Sterling to control Chester. Afte de Motte left new management ( mainly Voorhees and Meek) for inexplicable reason gave up that shares Sterling had.Sonew Sunshine owners stuck.

3. As you say you can play with the numbers, i Chester ground can produce 1 million ounces, and market values that at X, that is one method. Or try to use cost per ounce etc and arrive at a rough valuation. The 8 million ounce plan current owners have is a massive increase in capacity, so timing a bit of an issue.

I think no matter how you look at it , Chester will want $ 5 or $10 per share and ore to be bought out. If current owners have 51% control, that leaves very little in public float- any buying ( as we see in 2003-2006 period) makes this thing shoot to the moon.Only risk is if current management doesnt hold out, but I think they are savvy and now what they have.