As a follow-up to my previous post, and to explain why I continue to remain optimistic, here is a cut and paste of my posting to the SAL forum at the StockHouse web-site ....
For those who read the news release and are unsure of how to interpret drill results, here's a simple idea ...
Forget the results and read the information contained in the news release. Then do some simple math!
First, the second paragraph, "Previous drilling identified a large gold rich porphyry copper system (Pine zone) indicating a geological reserve of 40 million tonnes grading 0.57 g/t gold (approximately 700,000 troy oz) and 0.15% copper (approximately 115,000,000 lb)".
Now remember the paragraph above refers to "previous drilling" so you don't even have to pay attention to current results. Now the last paragraph from the news release, "These drilling results support the potential for a much larger reserve from the original 40 million tonnes grading 0.57 g/t gold (approximately 700,000 troy oz) and 0.15% copper (approximately 115 million lb). It is the company's goal to develop the Pine zone into a large gold copper porphyry deposit similar to Southern Kemess."
Now for some simple math. I don't know the exact current value of gold or copper in the ground, but let's use some very conservative numbers and apply them to just the current reserve estimates referred to in
the first quote above. Let's use $25 per ounce for gold in the ground and $0.25 per pound for copper in the ground. I'm sure everyone would agree that those numbers are conservative enough.
Gold value = 700,000 ounces x $25 = $17,500,000.00
Copper value = 115,000,000 pounds x $0.25 = $28,750,000.00
Total value of ore in ground = $46,250,000.00
Canada StockWatch reports the companys currently outstanding shares at 7,600,000 shares. At yesterdays closing price of $0.61, that gives the company a current capitalization of $4,636,000.00.
So we have a company that has current reserves worth approximately ten times what the market values the company at today. Now take the information from the last paragraph of the news release suggesting
that chances are good that the reserve will be greatly expanded and apply that to the numbers above.
There is just one piece of information missing that means that buying shares in this company is still speculation and not a "sure thing". Just because there is gold and copper in the ground, does not mean
they can recover it economically. But if the reserves can be proven to be economical, then the numbers above stand. So, the company has one job and one job only, that is to prove the reserve economical.
To make a rational decision whether to hold shares in this company or not, a speculator has to look at risk vs. reward. Personally, in this case, I like the risk vs. reward scenario. Others will have to do their own due diligence and make their own decisions. |
