What are the possibilities for Donner's share price? Doing some calculations based on some wild assumptions I have come up with the following
Based on Donner getting 25% of the action after Teck takes its 50 percent cut (NAI getting the lions share), if Donner were to find an ore body of DFR/INCO's Voisey's Bay magnitude I calculate the following:
Market value of the ore body $ 4.6 billion (what Inco paid)
Donner's share 25% = $1.125 B
Approx 30,000,000 shares outstanding 1,125/30 = $ 37.50/share, nice return if you buy now @ $2.50
At Voisey's Bay Inco has reserves of ( reference www.gallery-gold.com/nflddept_mines1.html):
Ovoid 31.7 M tonnes @ 2.83% Ni, 1.68% Cu, 0.12% Co
Eastern Deeps 50 M tonne @ 1.36% Ni, 0.67% Cu, 0.09% Co
Gross value of ore:
Ovoid 31,700,000 x .0283 x $7700/tonne Ni ....6.91 B$
31,700,000 x .0168 x $2500/tonne Cu....1.33 B$
31,700,000 x .0012 x $75000/t Co.........2.85 B$
Eastern Dps 50,000,000 x .0136 x $7700/tonne Ni .......5.24 B$
50,000,000 x .0067 x $2500/tonne Cu.....0.84 B$
50,000,000 x .0009 x $75000/t Co..........4.50 B$
=======
$ 21.67 Billion
Inco paid $4.6 billion for this orebody. Is it safe to assume that $1.00 worth of ore in the ground is worth $0.21 in share value?
($21.67 / $ 4.6)
If this is the case then inorder for Donner to support share value @ $2.50 they would need to prove reserves of something of the following magnitude:
30,000,000 shares outstanding x $2.50 = $75 M
Donner's share 25% therefore x 4 = $300 M
1/.21 ratio therefore $300m/.21 = $1.43 Billion inground ore value
Arbitrary assay values of 2% Ni,1%Cu, &.25% Co would translate into a reserve of:
Inground ore value 7700x.02 + 2500x.01 + 75000x.0025 ~ $350.00/tonne
Donner would need to prove reserves of 1.43B/350 = +4 million tonnes
Assume ore density of 2.5 tonnes/m3 ~ 4m/2.5 = 1.6 M cubic meters
One such scenario would be an ore body 250 x 250 x 25 meters deep.
Just food for thought, my figures stand to be corrected. Anyone care to comment? |
