I should have waited another hour. Now the news is out:
see Stockwatch for full release
...
> According to a technical summary prepared for
> SOMIBESA by Francis O'Kelly, a chartered engineer of
> MCS Mineral Consulting Services Ltd, the Berenguela
> deposit contains a drill proven reserve of nearly 14 million
> tonnes assaying 131-220 grams silver per ton, 1,3% copper
> and 18% manganese.
14 Million tonnes with
Ag: Call it $5/oz, use a grade at the lower end 150 g/tonne = $25/tonne of deposit
Cu: At $1800/tonne at 1.3% = $23/tonne of deposit
Mn: Is listed at $1180/tonne, but I will use $100/tonne because the market is not as liquid as for other minerals, at 18% = $18/tonne of deposit.
Total is conservatively $66/tonne.
For 14M tonnes = $924M for the proven deposit. The 14M tonnes is "proven" according to the consulting services report and based on 124 drills:
>The deposit is a tabular body approximately 500 meters
>wide, 1.5 kilometers long and 60 meters thick, There is no
>overburden and stripping ratio for mining is minimal. The
>orebody was mined from 1905 to 1965. Underground
>workings total 17 km. Two major mining companies,
>Asarco and Chartered Consolidated, drilled the property in
>the 1960's and completed feasibility studies. Because of
>political and technical considerations the project was not
>developed at that time. The property was nationalized in the
>late 1960s and was unavailable until the Peruvian
>government initiated its privatization program.
>According to the MSC mineral consulting services
>technical summary, the Berenguela ore reserves may be
>considered in the proven category as a result of over 50
>years of active mining, followed by extensive exploration
>drilling by Asarco and Charter including 124 diamond drill
>holes totaling 6,628 metres.
>The design includes manganese recovery as an inherent step
>in the process, Once manganese recovery is included,
>revenues increase to the point where manganese becomes
>the most important economic constituent.
The $100/tonne used above is probably far too conservative if Mn value is to be greater than that of Cu and Ag combined.
>KCA has advised the company that the estimated cost to
>bring the project to the stage where a bankable feasibility
>study for a 700,000 tonne per year operation with a twenty
>year mine life is $3,000,000. The capital cost to put the
>project into production is estimated to be
>US$100,000,000.
>It is the intention of SOMIBESA, KCA and the company to
>enter into an agreement whereby the company will acquire a
>100% interest in the Berenguela project. In consideration
>for the property, the company has agreed to fund the project
>to the completion of feasibility and issue the principals of
>SOMIBESA a significant equity position in the company.
>The number of shares to be issued will be based, to a great
>extent, on the project's value.
They will have the $3.0M from the most recent placement (assuming it gets placed) and the $100M will likely be a mix of equity and debt. The float could grow by another 50-100% depending on the price and debt/equity ratio.
At 700Ktonne/yr and for the conservative value of $66/tonne, this implies revenues of $46M/yr. For a worst case scenerio of 40M shares this implies revenues of over 1$/share. |
