Stuff from Diamondplay.com:
Twin's Jackson Inlet project:
Twin's 100% owned Jackson Inlet project has reached Milestone 3 (mini bulk sample) but it has achieved an IPV of
only $37 million which places it in the middle of the valuation channel associated with a $500 million UPV. The
immediate question is whether the Jackson Inlet project deserves a $2 billion or $500 million UPV. Close analysis
does not provide a clear answer. A grade of 0.2 ct/t has been established through mini bulk sampling of the
Freightrain kimberlite system, but the parcel of diamonds has been deemed too small for valuation purposes. A
bigger problem is that limited delineation drilling on the Freightrain kimberlite has not established a meaningful
resource. The question remains open whether Freightrain is a small tonnage system or a large tonnage system at
depth. At the indicated grade the small tonnage scenario would be a bust. Freightrain's advancement in the diamond
exploration cycle is conditional on delineation drilling demonstrating meaningful tonnage. Even then the tonnage will
have to be very large at the indicated grade even if the diamonds end up having an average value in the $100-$300
per carat range. The Jackson Inlet play becomes more interesting when one looks at the project's history. The
project area on north Baffin Island has a dozen geophysical anomalies whose best explanation is that of a kimberlite
pipe. One of these, Cargo 1, was confirmed as a kimberlite pipe in 2001. Partial micro diamond results suggest a
grade much higher than Freightrain, though the anomaly's dimensions suggest a modest kimberlite resource.
Management's focus has been on proving that Freightrain is a diamond mine, but the results today suggest that
Freightrain on its own is a bust. The project, however, still has open ended potential as a kimberlite field or cluster
play. The Freightrain results indicate that the cratonic setting was friendly to the development of large, quality
diamonds. The question should not be whether Freightrain is a mine, but whether there are other better kimberlites
which might make a world class mine either individually or in combination. The Jackson Inlet play should properly be
classified as Milestone 1 or 2, namely target drilling or micro diamond testing. The IPV, of course, remains the same
because it is based on shares fully diluted, stock price and net interest. In terms of the $500 million UPV the Jackson
Inlet project's IPV would be above the valuation channel, but the IPV would be within the valuation channel
associated with a $2 billion UPV. For a diamond play to be a mine contender in the Arctic it pretty much has to be a
world class contender. Does Twin's Jackson Inlet play have world class potential? The diamonds recovered from
Freightrain demonstrate that the cratonic setting is good. Partial results for Cargo 1 hint that kimberlite grade can be
high. So the question becomes, do tonnage, grade and value come together anywhere in world class proportions?
The not-so-frivolous answer is "why not?" At Twin's present $37 million IPV, confirmation of a $2 billion ultimate
project value would deliver a 5,000% gain, 2,500% if you dilute the project either through a 50% farmout or
doubling of shares fully diluted through equity financing. If final micro diamond results for Cargo 1 plot a diamond
curve indicative of a 1-2 ct/t tonne grade, Cargo 1 would be a mini bulk sample candidate and the project overall
would develop considerable momentum as an exploration play for additional kimberlites. Rapid confirmation of
additional kimberlite pipes would make Jackson Inlet a solid candidate for a $2 billion UPV with an IPV somewhere
within the Milestone 3 (mini bulk sample) fair speculative value range of the $2 billion UPV valuation channel. That
would be a TPV range of $100-200 million, or a stock price 2-5 times higher current levels.
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