Carl, The market /mining industry values resources like this on three levels. Inferred, Probable and Proven. Inferred gets 25% of estimated value. Probable gets 50% and Proven is 75%. I will gladly stand corrected on this but I believe that the Inferred level is 1,000 foot separations, Probable is 500 foot and proven is 250 feet between holes.
Now, as to the math, it is very simply a matter of assay results and tonnage. One thing to keep in mind is that the larger the property the lower the opt necessary to make it profitable. But lets just say that a property even has 1 billion tons of material. With a perfectly satisfactory industry average for the U.S. of .25 opt on a metal that would translate to 250 million ounces of that metal. Any mine over 1 million is considered "world class". Now, recovery costs INCLUDE a variety of things such as removal of overburden (trees, rock cap, brush, etc.) bringing in roads, electric, water, etc. FL has none of that cost. Next is the total value per ton of material. The FL property has already shown multiple metals in the ore so lets say that you can get .25 on 3 metals. (and it is likely there are many more metals) That gets you to .75 opt gold equivelant very rough you understand. But even at current market prices, you still have about $225 per ton in market value. Minus the cost for recovery but spread over a much larger volume. In other words, recovery does get averaged in costs of buildings, support services that must be amortized over the life of the mine. If you have a mine that will run for 100 years, that is alot of amoritization as compared to 20 years.
Bottom line on FL, a very big property with a very solid opt will be very profitable and therefor, the market will be very interested even if the numbers don't hit the last round of Ledoux numbers. And if they do get multiple opt, get out of the way of the stampede.
As far as what the final value of FL will be and what the market will value it at? Well lets wait for recovery. That will tell the real story, but until then, good solid, repeatable assay results will bring us a long way to industry acceptance.
Regards,
Tom F. |
