SUBJECT: RE: GOZ and OSK....Super pits Posted By: TheRock17
Post Time: 1/6/2007 13:02
From the SEDAR technical report dated Dec 15/05, Wardail estimated the Measured, Indicated and Inferred gold resources for a defined area north and adjacent to the current open pit ( towards the tailings pond..see map on web site ).
A 43-101 resource estimation using Multiple Indicator Kriging at a variety of cut-off grades for this defined area produced
the follow ing results:
MIK Resource Evaluation
Class
Measured, Indicated, Measured +Indicated, Inferred
Cut-Off Kt Au g/t Kt Au g/t Kt Au g/t Kt Au g/t
0.5 407 3.45 1,666 3.39 2,073 3.40 8,620 3.14
1.0 252 5.12 993 5.18 1,244 5.17 4,769 5.08
That is, in the 43-101 M & I category, GOZ has 225,000 oz at a 0.5 gm cut-off, and another 870,000 oz in the Inferred for a total of about 1 million oz.
At the 1 gm cutoff ( ie all ore containing less than 1 gm/ton is considered to be waste ore ), GOZ has 210,000 oz in the M & I category and an additional 775,000 oz in the Inferred category.
OSK , at the 1 gm cut-off, has 4.6 million oz at 1.6 gms/ton in the 43-101 Inferred category and none in the higher rated M & I category.
So, in addition to its greater exposure ( OSK is covered by several analysts ) and geographical familiarity ( Malarctic is in Que ), OSK has over 4.5 times as many oz of gold in the 43-101 category , than GOZ has.
Simply on that bare statistic, GOZ should be accredited a market cap of $750 /4.5 or about $165 million ( $2.75/share ).
Other factors come into play......OSK must convert some or all of its Inferred to M & I before a feasability study can be done, which may involve a lot more infill drilling, its grades are low and perhaps low enough that the open pit may not be economic at POG below $550, it has significant capital costs ahead, if it were to proceed to mining, and in all probbaility that wont happen til at least late 2008......but, on the positive side, there is substantial optimnism that the actual resource could be double the currently mensurated gold resource.
GOZ has many positive attributes......an exsiting infrastructure and mine, including mill and concentrator, with Boliden next door providing smelting services, a huge database covering all of Sweden and 11 known gold targets within a 5km radius of the Bjorkdal open pit, and historically measured gold resource approaching 3 million oz, current production of 20,000 oz per year and sufficient cash flow that much of the current u/g exploration and development can be paid as you go, along with no debt.
Its share price has been held back, as it proceeds to prove up the resource potential and demonstrate that such a resource can be economically mined over a sustained period.
The former concern is increasingly becoming mitigated by the very positive results of the 2006 exploration program.
The latter concern will be substantively mitigated by the pre-feasability study that shall soon be released, and completely mitigated should the subsequent bulk test mining results in late Q1 confirm the presumtive and known economic parameters outlined by the pre-feasability study.
At that point and subsequently, GOZ should then be accorded the trading multiples of its peers..which at current POG would be a 10 bagger.
Hopefully, that would have answered the question on the huge diff between OSK and GOZ market caps..
All, in my honest opinion....
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