If you go over the Proteus Capital report, on page 11 it gives some economics for this kind of operation. Operating costs using a strip ratio of 4.4-6.5 is $6-6.50 a ton. The first 26 holes averaged 87g Ag (roughly 2.8 oz), and the mill recovery is given as 85% (except Au). Using $4.75 POS, that's $11.33 rock. Au was 0.52g, only 55% recovered , so only about $2.50 rock. Zn averages 1.85% and is 85% recoverable, so that's about $12 rock at $800/t. Pb is 0.86% 88% recovery, that's about $3.50 rock at $500/t. The total for all four is over $29/t recoverable rock EVEN AT THESE DEPRESSED PRICES. So I can't agree that grade and stripping is at issue.
I think what's happened is that when the stock ran to $4.00 (and a US 85 m enterprise value) that was based on the expectation that not only would the big stepout hole 24 be great, but also so would the various holes drilled along the edges like 19,20,21,22, 23 (see drill hole map on page 9). Well hole 24 did indeed return that nice big 250m intercept of $30/t recoverable (mostly zinc, not silver) right in line with the first 26 hole average. But look at that deeper 62 m interval. I first I though how nice, but then calculated recoverable rock value of a whopping $46/t. THAT EVERYBODY IS ONE GREAT MUTHA F-- G HOLE! I mean come on, who cares if it's mostly zinc, or has a high strip ratio, it's the rock value that counts regardless of what the metal is. What are ya gonna do, sell it because you a f--g silver investor? I don't know about the rest of the "investors" in this stock, but I for one am salivating about the infill around this sucker.
On a more mellow note, it looks like 17 picked up the continuity real nicely. That 104m deeper interval is about $33/t recoverable, and the 70m at the surface is $19 rock, so the stripping at that spot is nearly nothing. But then look at that bonus 26m of $46 rock (half Ag) at the bottom. That hole brings the deposit average up a notch.
If there is disappointment with these results I guess it's that some of the edge holes like 18, 19, 20, 21, 22 were below the average (mostly in the 15-25 range) for this particular deposit. But gee whiz that would be a normal mining profit anywhere else , even if not superlative. At minimum those "semi-misses" show how widespread the mineralization is here.
My conclusion: Stupid, mindless selling, what more can I say? I think we have a special situation here and I don't think we've seen the last of the fun. My target is ten bucks. |
