Todays Canaccord newsletter:
Rupert Resources (RUP : VSE : $0.68)
Recommendation: AVOID
52-week price range: $3.70-0.60
Shares O/S: basic 7.4M
fully diluted 12.4M
Long-term debt: Nil
Market capitalization: $5M
Last week (Oct. 28), Rupert Resources reported that MPH Consulting had
estimated an inferred resource of 28.2M tonnes containing 10.8M carats
i.e., 0.38 c/t) for the Main Pipe at the Crown diamond mine project in
South Africa: interestingly, no bulk sampling has been done. Rupert
is earning a 75% interest in the project. MPH estimated this tonnage
between the 354 and 855 m level with a total of 37.81M tonnes
projected to a 950 m depth. The release states that "MPH recommends
use of a base case value of US$110/carat for scoping and financial
modelling."
The Crown Mine operated between 1896 and 1931, producing 727,675
carats from 4.9M tonnes (0.148 c/t) and residual resources were then
estimated at 20.3M tonnes containing 6.56M carats (i.e. 0.3 c/t) to a
depth of 110 m. It is difficult to correlate historical carat values
to today's or to the carat values of stones being recovered from the
old tailings. The 1,914 stones recovered from the first five holes in
the current program weighed only 1.88 carats for an average of
0.00098, say 0.001 carat per stone. In order to corroborate grade and
determine an average carat value, a much larger bulk sample from depth
is still required; while the historical residual grade and
contemporary grade are close, we do need a decent sized parcel of
representative stones for valuation.
Financing for the $5M( underground bulk sampling project earlier this
year was not successful due to market conditions, and not much has
changed on that front. We believe that Rupert has about $250,000 in
working capital. We do not understand why other, potentially
near-surface, geophysical kimberlite targets on the property have not
been tested. Recommendation: AVOID.
David James (204) 988-9602
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