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Gold/Mining/Energy : Corner Bay Silver (BAY.T)
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To: Elizabeth Andrews who wrote (914)6/9/2000 10:37:00 AM
From: Claude Cormier  Read Replies (1) of 4409
 
<<Claude, the 6% NAV calculation is baloney due to the fact that the economics claimed here do not have a reserve base to deliver long term cash flow at these prices.>>

That is not true.

A deposit with $10+ of mineral content/ton with a recovery rate of 65%-70% and cost per ton of $3-$3.50 is certainly economic. This is even more true when you understand that in the first 2-3 years the rock that will be processed will have a value per ton in excess of $20.

<<I also mentioned a long, long time ago that the silver recovery rate was the issue and the only way to determine the truth was to due a 50,000 ton leach test, on a pad in real conditions at a crush size that appears to be correct. The stuff they are doing in the lab is not representative of field reality.>>

I don't see why this should be done when it is not done for 99% of the heap leaching operations. Column tests are good enough when they produce consistant and repeatable results.

I suggest you trust the consultant BAY has hired. The company is Metcon Research, a very reputable firm. They were the consultant at Rochester which is the only other heap leach silver operations. The ore at Alamo Dorado is much better than it is at Rochester (Coeur D'alene) being mostly a oxidized silver chloride (versus silver sulphides at ochester). This stuff has a hardness of only 2.5 and liberate the silver easily. Rochester has a recovery rate of 59% with the sulfides and is breaking even at current prices. The grade there is lower than at Alamo Dorado and they have no high grade starter pit.

BTW, even with a recovery rate of only 50%, Alamo Dorado appears to be profitable with an IRR of 30%.
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