From the recent news "Occasional fancy colored diamonds are recovered including
pinks, yellows, blues and reds. These stones often carry a premium on price."
I begin by saying that this is my analysis of the two most recent news releases for PVF/EM and PVF/PXM.
Let me see if I can make some sense of them. I am assuming that all land within the
claim block are being shared proportionately as per the following.
1. PVF, EM and Brazilian co. have applied for mineral claims for a 215,000 hectare claim
block.
a. PVF .......80% going to 50%
b. EM ........30% going to 50% if and when the option for 20% is exercised.
c. Br.Co.....20% going to 0% if and when the option for 20% is exercised.
So we can rightfully conclude that PVF will hold 50% of the mineral claims within the
whole 215,000 hectares and that EM will eventually hold 50% after they exercise their
option to buy out the Brazilian company 20% share.
2. Now within the 215,000 hectares there is a sub claim block of 10,000 hectares.
This is being partially farmed out to PXM.
a. PXM......40% after they have spent $250,000
b. PVF.......10% remaining after PXM has spent $250,000
c. EM ......30% going to 50% if and when the option for the 20% is exercised.
d. Br.Co....20% going to 0% if and when the option for the 20% is exercised.
(Sorry to be repetitive but I think it helps to keep this all straight.)
Now lets look at the numbers for this 10,000 hectare play within the larger claim block
and let's not forget that this is only a very small portion of the total play. It is not
likely the two Paramount would claim such a large area as 215,000 claim block to
protect only 10,000 claim block. I suspect there is very likely much more that we
don?t know yet about the other 205,000 hectares. We will undoubtedly hear about
other farm in deals with other companies. Possibly other jvs as well. This may well
only be the beginning.
According to the NR current production is in the area of 2500 cts / month. The JV
equipment is capable of producing in excess of 100 cubic meters / day. The initial ct
counts are estimated to be .5 ct / cubic meter. The estimated value ranges from $10 /
ct to $2000 / ct with an average of $150 / ct. Assuming production gets on schedule at
these figures, then the JV will be producing 50 cts / day (1500 cts / month) at $150 / ct
which works out to be $7500 / day or approximately $2,737,500 / year assuming a
year round operation. This also presumes there is a large enough quantity to mine on a
long term basis.
Then there is the gold. In the Alto Paraguai area the gold is approximately 500g per
month. The diamonds produced there are 250 to 300 / week. (I'll assume the average
of 275 cts / week) For a month then we'll conclude 275 X 52 weeks -:- 12 months =
1192 cts / month. Gold then is being produced at 500g for every 1192 cts produced.
The ratio is .42g gold to 1 ct. diamonds. If then the area produces 1500 cts / month as
stated above then there will be 630g of gold / month produced as a by product. This
equates to about 20 oz / month. I will use a figure of $150 / oz for gold delivered to
the smelter. This adds $3000 / month to the operating revenues or $36,000 / year.
The total revenues for the year will be $2,773,500.
Now lets see who owns what of this revenue. Go back to our original table.
PVF 10%..........$277,350
PXM 40%.........$1,109,400
EM 30% ...........$832,050 (eventually $1,286,750...$832,050 + $554,700)
Br.Co 20%.........$554,700
One must also remember that PVF owns 55% of PXM (55% X $1,109,404)so adding
that to PVF and we will have PVF with $610,170 + $277,350 = $887,520 combined
value.
Whew! If this is not complicated then I don't think I want to see it get complicated.
Again I remind you that this value is added to the PVF bottom line as they will be in
production and actually generating revenue from a very small parcel of the larger claim
block. I would hope this helps understand the quagmire and may stimulate some
questions / discussion. I can?t help but think this is just the beginning of what we will
see out of Brazil in the near future. If so the primary JV participants should experience
some substantial growth both in assets and share price.
What we need to know from here is just how much alluvial gravel is there. Is there
1,000,000, 10,000,000 or 100,000,000 cubic meters? I would also expect the
company to begin reporting on the size, value and quantity of diamonds it finds there
over the next few months. The company will be doing further exploration bulk
sampling to establish these numbers and we should hear about it in due course.
I would really like to know how PVF got in there with an 80% ownership of these two Brazilian companies in the first place. Perhaps the cash from the jv's are helping to pay for the PVF acquisition. Very interesting developments these. Looking forward to the weeks ahead.
Ray |
