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Gold/Mining/Energy : Naxos Resources (NAXOF)
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To: Henry Volquardsen who wrote (8118)1/14/1998 1:58:00 PM
From: Jan A. Van Hummel  Read Replies (1) of 20681
 
Henry,

I want to look a little closer at what you state tonight.
Just a quick observations.

The size of the deposit as such will have limited bearing. The value
of NAXOS stock will be a function of the stream of income that can be
derived from the deposit.

It will make a material difference whether the eventual mine will
process 5000 tons per day, 10000 tons per day or 20000 tons per day.

As to the reserves you quote some factors. Two points: 1) True, 200
years out will be meaningless at PV; however, 2) you have to consider
inflation as well, which will improve the discount factor.

Given the potentially low cost of operation due to the high Au content
I would argue that whatever Naxos could produce would soon displace
existing mining production rather than add to it. Naxos will bring down
the cost curve. High cost mines will just have to close.

JMHO

Jan
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